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Instructions On January 1 , Year 1 , when its $ 3 0 par value common stock was selling for $ 7 0 per share,
Instructions On January Year when its $ par value common stock was selling for $ per share, a corporation issued $ million of convertible debentures due in years. The conversion option allowed the holder of each $ bond to convert it into six shares of the corporation's $ par value common stock. The debentures were issued for $ million. At the time of issuance, the present value of the bond payments was $ million, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January Year the corporation's $ par value common stock was split for On January Year when the corporation's $ par value common stock was selling for $ per share, holders of of the convertible debentures exercised their conversion options. The corporation uses the straightline method for amortizing any bond discounts or premiums. Required: Prepare the journal entry to record the original issuance of the convertible debentures. Prepare the journal entry to record the exercise of the conversion option, using the book value method.
Instructions
On January Year when its $ par value common stock was selling for $ per share, a corporation issued $ million of convertible debentures due in years. The conversion option allowed the holder of each $ bond to convert it into six shares of the corporation's $ par value common stock. The debentures were issued for $ million. At the time of issuance, the present value of the bond payments was $ million, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January Year the corporation's $ par value common stock was split for On January Year when the corporation's $ par value common stock was selling for $ per share, holders of of the convertible debentures exercised their conversion options. The corporation uses the straightline method for amortizing any bond discounts or premiums.
Required:
Prepare the journal entry to record the original issuance of the convertible debentures.
Prepare the journal entry to record the exercise of the conversion option, using the book value method.
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