Question
Hello, the answer that's already posted does not have the journal enties. Can you please post the journal entries? On April 1, 2009, Workplace Equipment
Hello, the answer that's already posted does not have the journal enties. Can you please post the journal entries?
On April 1, 2009, Workplace Equipment Company authorized the sale of $5,000,000 of 6% convertible bonds with interest payment dates of April 1 and October 1. The bonds were sold on July 1, 2009, and mature on April 1, 2039. The bond discount totaled $398,200. The bond contract entitles the bondholders to receive 20 shares of $1 par value common stock in exchange for each $1,000 bond. On April 1, 2019, $700,000 exercised their conversion feature. On July 1, 2019, Workplace Equipment Company reacquired bonds, face value $600,000, on the open market. The balances in the equity accounts as of December 31, 2019, were as follows: Common stock, $1 par, authorized 3 million shares, issued and outstanding, 300,000 shares = $300,000 Paid-in capital in excess of par = $6,400,000 Maket Values of the common stock and bonds were as follows:
Date | Bonds (Per $1,000) | Common Stock (per share) |
4/1/2019 | $1,120 | $52 |
7/1/2019 | $1,200 | $61 |
Prepare journal entries on the issuers books for each of the following transactions. (Use the straight-line amortization method for the bond discount.)
Sale of the bonds on July 1, 2009
Interest payment on October 1, 2009
Interest accrual on December 31, 2009, including bond discount amortization for the six months since the bond issuance
Conversion of bonds on April 1, 2019. (Assume that interest and discount amortization are correctly shown as of April 1, 2019. No gain or loss on conversion is recognized.)
Reacquisition and retirement of bonds on July 1, 2019. (Assume that interest and discount amortization are correctly reported as of July 1, 2019.)
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