On Jan 1st, 2017, ABC Co. sold a convertible bond with a par value of $100,000 in the market for $120,000. The bonds are convertible into 24,000 ordinary shares of $1 per share par value. The bond has a 5-year life and has a stated interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond on Jan 1st, 2017, is 8%. The liability component of the bond is computed to be 107,986. The following bond amortization schedule is provided for this bond.

Effective-interest method 10% Bond Discounted at 8%
Date	Cash Paid	Interest Expense	Premium Amortized	Carrying Amount of Bonds
1/1/17				107,986
12/31/17	10,000	8,639	1,361	106,625
12/31/18	10,000	8,530	1,470	105,155
12/31/19	10,000	8,412	1,588	103,567
12/31/20	10,000	8,285	1,715	101,852
12/31/21	10,000	8,148	1,852	100,000

The journal entry to issue the bonds includes.....................

Select one:

a. Credit cash for $120,000

b. Credit share premium - conversion equity for $12,014

c. Debit bonds for $107,986

d. Debit cash for $107,986

The journal entry to pay 2018 interest includes.....................

Select one:

a. Credit interest expense for $8,530

b. Debit interest expense for $10,000

c. Debit bonds payable for $1,470

d. Debit cash for $10,000

Assume that the bonds were converted to ordinary shares on December 31st, 2020. The fair value of the liability component is determined to be $105,000 on December 31st, 2020. The 2020 interest is already recorded. The journal entry to record this conversion includes.....................

Select one:

a. Debit Share Capital - Ordinary for $24,000

b. Credit bonds payable for $101,852

c. Credit Share-premium - conversion equity for $12,014

d. Credit Share-premium - Ordinary for $89,866

Assume that bonds were repurchased on December 31st, 2020 for $108,000. As indicated previously, the fair value of the liability component is determined to be $105,000 on December 31st, 2020, and 2020 interest is already recorded.

The journal entry to record the repurchase of bonds includes..........

Select one:

a. Credit share premium - conversion equity for $3,000

b. Credit bonds payable for $101, 852

c. Credit gain on repurchase for $3,148

d. Debit loss on repurchase for $3,148