Nexus Ltd issued convertible bonds on July 1, 2004 The $5,000,000 bonds pay annual interest of 8 each July 1 and mature on July 1, 2020 Each $1,000 bond is convertible into 50 common shares at the investors option Nexus received proceeds of $5,350,000 for the bond at issue date The market (yield) rate is 9 Required Prepare the journal entry on Nexus books at issuance using the incremental method Assume Nexus decided to repay (retire) the bonds early on July 1, 2008, after interest is recorded Record the early repayment assuming Nexus pays investors $5,095,000 of which $728,000 is allocated to the conversion rights Instead of part b) assume investors decided to convert 30 of their bonds at July 1, 2008, after interest is recorded Record the conversion on Nexus books

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 30, 2024

Nexus Ltd. issued convertible bonds on July 1, 2004. The $5,000,000 bonds pay annual interest of 8% each July 1 and mature on July 1,

Nexus Ltd. issued convertible bonds on July 1, 2004. The $5,000,000 bonds pay annual interest of 8% each July 1 and mature on July 1, 2020. Each $1,000 bond is convertible into 50 common shares at the investors option. Nexus received proceeds of $5,350,000 for the bond at issue date. The market (yield) rate is 9%.

Required:

Prepare the journal entry on Nexus books at issuance using the incremental method.
Assume Nexus decided to repay (retire) the bonds early on July 1, 2008, after interest is recorded. Record the early repayment assuming Nexus pays investors $5,095,000 of which $728,000 is allocated to the conversion rights.
Instead of part b) assume investors decided to convert 30% of their bonds at July 1, 2008, after interest is recorded. Record the conversion on Nexus books.