Question
On January 1, 2017, Flint Corporation issued $3,980,000 of 10-year, 8% convertible debentures at 104. Interest is to be paid semiannually on June 30 and
On January 1, 2017, Flint Corporation issued $3,980,000 of 10-year, 8% convertible debentures at 104. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be converted into 8 shares of Flint Corporation $101 par value common stock after December 31, 2018. On January 1, 2019, $398,000 of debentures are converted into common stock, which is then selling at $112. An additional $398,000 of debentures are converted on March 31, 2019. The market price of the common stock is then $117. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis. Make the necessary journal entries for:
(a) | December 31, 2018. | (c) | March 31, 2019. | |||
(b) | January 1, 2019. | (d) | June 30, 2019. |
Record the conversions using the book value method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)
No. | Date | Account Titles | Debit | Credit |
(a) | 12-31-18 | |||
(b) | 1-1-19 | |||
(c) | 3-31-19 | |||
(to record interest expense) | ||||
3-31-19 | ||||
(to record the conversion) | ||||
(d) | 6-30-19 | |||
Account List:
Bond Conversion Expense Bonds Payable Cash Compensation Expense Common Stock Convertible Preferred Stock Debt Conversion Expense Discount on Bonds Payable Income Summary Incremental Cash Insurance Expense Interest Expense Interest Payable Interest Receivable Liability under Stock Appreciation Plan No Entry Paid-in Capital in Excess of Par - Common Stock Paid-in Capital in Excess of Par - Preferred Stock Paid-in Capital-Expired Stock Options Paid-in Capital-Stock Options Paid-in Capital-Stock Warrants Premium on Bonds Payable Preferred Stock Retained Earnings Unamortized Bond Issue Costs Unearned Compensation
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