On December 31, 20x0, the Scala Corporation issued $60,000,000 of 4% convertible

bonds for total proceeds of $58,700,000. The bonds mature in 10 years and pay interest

semi-annually (June 30 and Dec 31). Bonds of similar risk without conversion features

would have yielded 4.8%.

Part A Assume that the bonds are convertible at the option of the bondholder.

Prepare journal entries to record:

issuance of the convertible bonds on December 31, 20x0

payment of interest and related amortization on June 30, 20x1

payment of interest and related amortization on June 30, 20x3

conversion of $10,000,000 of the bonds on July 1, 20x5

repurchase of $20,000,000 of the bonds on July 1, 20x6 at 1.02

derecognition of the remaining $30,000,000 of the bonds on December 31, 20x10