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On January 1 , 2 0 1 , when its $ 3 0 par value common stock was selling for $ 8 0 per share,
On January when its $ par value common stock was selling for $ per share, Gierach Corporation issued $ million of convertible debentures due in years. The conversion option allowed the holder of each $ bond to convert the bond into five shares of the company's $ par value common stock. Cash settlement upon conversion is not permitted. The debentures were issued for $ million. Without the conversion feature, the bonds would have been issued for $ million.
On January X the company's $ par value common stock was split three for one. On January X when the company's $ par value common stock was selling for $ per share, holders of of the convertible debentures exercised their conversion options.
Required:
Following US GAAP, prepare a journal entry to record the original issuance of the convertible debentures.
How much interest expense would the company recognize on the convertible debentures in
Prepare a journal entry to record the exercise of the conversion option using the book value method.
Prepare the entry to record the exercise of the conversion option using the marketvalue method.
Complete this question by entering your answers in the tabs below.
Prepare a journal entry to record the exercise of the conversion option using the book value method.
Prepare the entry to record the exercise of the conversion option using the marketvalue method.
If no entry is required for a transactionevent select. No journal entry required" in the first account field. Enter your answers in whole dollars rather than in millions.
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