On January 1, 2019, Stellar issued 10-year, $300,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Stellar $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2020. (Ignore all tax effects.)

(a)

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Prepare the journal entry Stellar would have made on January 1, 2019, to record the issuance of the bonds. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 31, 2019

Attempts: 1 of 2 used

(b)

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Stellars net income in 2020 was $34,000 and was $32,000 in 2019. Compute basic and diluted earnings per share for Stellar for 2020 and 2019. (Round answers to 2 decimal places, e.g. 52.75.)

		2020		2019
Basic earning per share		$		$
Diluted earning per share		$		$

Attempts: 2 of 2 used

(c)

Assume that 75% of the holders of Stellars convertible bonds convert their bonds to stock on June 30, 2021, when Stellars stock is trading at $32 per share. Stellar pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the conversion. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)