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Exercise 1 4 - 2 7 ( Algo ) IFRS; convertible bonds [ LO 1 4 - 5 , 1 4 - 7 ] On
Exercise Algo IFRS; convertible bonds LO
On January Madison Products issued $ million of year convertible bonds at a net price of $ million.
Madison recently issued similar, but nonconvertible, bonds at that is of face amount
The bonds pay interest on June and December
Each $ bond is convertible into shares of Madisons no par common stock.
Madison records interest by the straightline method.
On June Madison notified bondholders of its intent to call the bonds at face value plus a call premium on July
By June all bondholders had chosen to convert their bonds into shares as of the interest payment date.
On June Madison paid the semiannual interest and issued the requisite number of shares for the bonds being converted.
Required:
Assume that Madison Products prepares its financial statements according to International Financial Reporting Standards using the net method.
& Prepare the journal entries for the issuance of the bonds by Madison and interest payment for the June
Prepare the journal entries for the June interest payment by Madison and the conversion of the bonds book value method
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