Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Horngrens Cost Accounting A Managerial Emphasis

Authors: Rajan Datar, Srikant M. Datar

16th Edition

9352860195, 978-9352860197

More Books

Students also viewed these Accounting questions