On Jan. 1, 2023, MWM Corp. issued a series of 100 convertible bonds, maturing in 5...
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On Jan. 1, 2023, MWM Corp. issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500. MWM received $51,400 for the bond issue. The bonds paid interest every Dec 31 at 6% the market interest rate for bonds with a comparable level of risk was 6.50%. The bonds were convertible to common shares at a rate of 12 common shares per bond. Flounder amortized bond premiums and discounts using the effective interest method, and the company's year-end was Dec 31. MWM follows ASPE. On Jan. 01, 2024, 20 of the bonds were converted into common shares. On Jun 30, 2024 another 20 bonds were converted into common shares. The bondholders chose to forfeit the accrued interest on these bonds. On Jan 01, 2025, when the fair value of the bonds was $ 30,750 due to a decrease in market interest rates, a conversion inducement of $ 28/bond was offered to the remaining bondholders to convert their bonds to common shares. All of the remaining 60 bonds were converted into common shares at that time. a. Prepare the journal entry at Jan 01, 2023 Cash 51,400 Bonds Payable Contributed Surplus - Conversion Rights b. Prepare the journal entry at Dec 31, 2023 Interest Expense Bonds Payable Cash c. Prepare the journal entry at Jan 01, 2024 Bonds Payable Contributed Surplus - Conversion Rights Common Shares d. Prepare the journal entry at Jun 30, 2024 Bonds Payable Interest Expense Contributed Surplus - Conversion Rights Common Shares e. Prepare the journal entry at Dec 31, 2024 Interest Expense Bonds Payable Cash f. Prepare the journal entry at Jan 01, 2025 Bonds Payable Loss on Redemption of Bonds Contributed Surplus - Conversion Rights Retained Earnings Common Shares Cash On Jan. 1, 2023, MWM Corp. issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500. MWM received $51,400 for the bond issue. The bonds paid interest every Dec 31 at 6% the market interest rate for bonds with a comparable level of risk was 6.50%. The bonds were convertible to common shares at a rate of 12 common shares per bond. Flounder amortized bond premiums and discounts using the effective interest method, and the company's year-end was Dec 31. MWM follows ASPE. On Jan. 01, 2024, 20 of the bonds were converted into common shares. On Jun 30, 2024 another 20 bonds were converted into common shares. The bondholders chose to forfeit the accrued interest on these bonds. On Jan 01, 2025, when the fair value of the bonds was $ 30,750 due to a decrease in market interest rates, a conversion inducement of $ 28/bond was offered to the remaining bondholders to convert their bonds to common shares. All of the remaining 60 bonds were converted into common shares at that time. a. Prepare the journal entry at Jan 01, 2023 Cash 51,400 Bonds Payable Contributed Surplus - Conversion Rights b. Prepare the journal entry at Dec 31, 2023 Interest Expense Bonds Payable Cash c. Prepare the journal entry at Jan 01, 2024 Bonds Payable Contributed Surplus - Conversion Rights Common Shares d. Prepare the journal entry at Jun 30, 2024 Bonds Payable Interest Expense Contributed Surplus - Conversion Rights Common Shares e. Prepare the journal entry at Dec 31, 2024 Interest Expense Bonds Payable Cash f. Prepare the journal entry at Jan 01, 2025 Bonds Payable Loss on Redemption of Bonds Contributed Surplus - Conversion Rights Retained Earnings Common Shares Cash
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Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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