On December 31, 20x0, a publicly accountable entity issued convertible bonds for total cash proceeds of $21,200,000.

The bonds mature on December 31, 20x20 and each bond is convertible at the option of the bondholders at any time.

Each $1,000 bond is convertible into 20 common shares. The face value of the bonds is $20,000,000 and pay an annual coupon of 3%. Coupon payment dates are June 30 and December 31. Bonds of similar risk would have yielded 2.8%.

Required

a. Write the journal entry to record the bond issue on December 31, 20x0.

b. On July 2, 20x8, then the common stock was trading at $62, 40% of the bondholders converted their bonds into common shares. Write the journal entry to record the conversion of bonds on this date.

c. On Jan 2, 20x10, the entity repurchased 25% of the bond issue (25% of the original amount) at 102. Write the journal entry to record the repurchase.

d. Assume now that the bonds are mandatorily convertible into common shares on December 31, 20x20. Write the journal entries to record:

- issuance of the convertible bonds on December 31, 20x0 -

payment of interest on June 30, 20x1 -

payment of interest on December 31, 20x1

- all journal entries on December 31, 20x20