On December 31, 2018, Lugaboo Corporation issues 6%, 10-year convertible bonds payable with a face value of $2,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 7%. Lugaboo amortizes bond discounts using theeffective-interest method.
Requirement 1. Use the PV function in Excel to calculate the issue price of the bonds. (Round your answer to the nearest whole dollar.) The issue price of the bonds is $ Requirement 2. Prepare an effective-interest method amortization table for the first four semiannual interest periods. (Round your answers to the nearest whole dollar.) Semiannual Interest Date Interest Payment Amortization Table Discount Interest Expense Amortization Discount Account Balance Bond Carrying Amount 12-31-2018 6-30-2019 12-31-2019 6-30-2020 12-31-2020 3. Journalize the following transactions: a. Issuance of the bonds on December 31, 2018 Credit Convertible Bonds Payable. b. Payment of interest and amortization of the bond discount on June 30, 2019. c. Payment of interest and amortization of the bond discount on December 31, 2019. d. Conversion by the bondholders on July 1, 2020, of bonds with a total face value of $800,000 into 70,000 shares of Zugaboo's $1-par common stock. Requirement 4. Show how Zugaboo would report the remaining bonds payable on its balance sheet at December 31, 2020. (Calculate the discount by multiplying the discount calculated in the original amortization table by the fraction of bonds remaining. Round your answers to the nearest whole dollar.) Zugaboo Corporation Partial Balance Sheet December 31, 2020 Less: Requirement 1. Use the PV function in Excel to calculate the issue price of the bonds. (Round your answer to the nearest whole dollar.) The issue price of the bonds is $ Requirement 2. Prepare an effective-interest method amortization table for the first four semiannual interest periods. (Round your answers to the nearest whole dollar.) Semiannual Interest Date Interest Payment Amortization Table Discount Interest Expense Amortization Discount Account Balance Bond Carrying Amount 12-31-2018 6-30-2019 12-31-2019 6-30-2020 12-31-2020 3. Journalize the following transactions: a. Issuance of the bonds on December 31, 2018 Credit Convertible Bonds Payable. b. Payment of interest and amortization of the bond discount on June 30, 2019. c. Payment of interest and amortization of the bond discount on December 31, 2019. d. Conversion by the bondholders on July 1, 2020, of bonds with a total face value of $800,000 into 70,000 shares of Zugaboo's $1-par common stock. Requirement 4. Show how Zugaboo would report the remaining bonds payable on its balance sheet at December 31, 2020. (Calculate the discount by multiplying the discount calculated in the original amortization table by the fraction of bonds remaining. Round your answers to the nearest whole dollar.) Zugaboo Corporation Partial Balance Sheet December 31, 2020 Less
