On January 1, 2023, BDM Corporation issued a series of 100 convertible bonds, maturing in 5...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, 2023, BDM Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500. BDM received $51,200 for the bond issue. The bonds paid interest every December 31 at 8%; the market interest rate for bonds with a comparable level of risk was 8.50%. The bonds were convertible to common shares at a rate of 8 common shares per bond. BDM amortized bond premiums and discounts using the effective interest method, and the company's year-end was December 31. BDM follows ASPE. On January 1, 2024, 20 of the bonds were converted into common shares. On June 30, 2024, another 20 bonds were converted into common shares. The bondholders chose to forfeit the accrued interest on these bonds. On January 1, 2025, when the fair value of the bonds was $30,630 due to a decrease in market interest rates, a conversion inducement of $26/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 this time. a. Prepare the journal entry at January 1, 2023. b. Prepare the journal entry at December 31, 2023. C. Prepare the journal entry at January 1, 2024. d. Prepare the journal entry at June 30, 2024. Prepare the journal entry at December 31, 2024. e. Prepare the journal entry at January 1, 2025. On January 1, 2023, BDM Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500. BDM received $51,200 for the bond issue. The bonds paid interest every December 31 at 8%; the market interest rate for bonds with a comparable level of risk was 8.50%. The bonds were convertible to common shares at a rate of 8 common shares per bond. BDM amortized bond premiums and discounts using the effective interest method, and the company's year-end was December 31. BDM follows ASPE. On January 1, 2024, 20 of the bonds were converted into common shares. On June 30, 2024, another 20 bonds were converted into common shares. The bondholders chose to forfeit the accrued interest on these bonds. On January 1, 2025, when the fair value of the bonds was $30,630 due to a decrease in market interest rates, a conversion inducement of $26/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 this time. a. Prepare the journal entry at January 1, 2023. b. Prepare the journal entry at December 31, 2023. C. Prepare the journal entry at January 1, 2024. d. Prepare the journal entry at June 30, 2024. Prepare the journal entry at December 31, 2024. e. Prepare the journal entry at January 1, 2025.
Expert Answer:
Answer rating: 100% (QA)
ANSWER a January 1 2023 Cash 51200 Discount on Bonds Payable 2800 Bonds Payable 54000 To record the ... View the full answer
Related Book For
Fundamental Accounting Principles
ISBN: 978-1259536359
23rd edition
Authors: John Wild, Ken Shaw, Barbara Chiappett
Posted Date:
Students also viewed these accounting questions
-
BE12.3 (LO 1), AP The following T-account is a summary of the Cash account of Alixon Company. Cash (Summary Form) Balance, Jan. 1 8,000 Receipts from customers 364,000 Payments for goods 200,000...
-
Question II In a 1994 research paper, two economists examined the impact of looks on earn- ings using interviewers' ratings of respondents' physical appearance. They used data in which respondents...
-
! Required information [The following information applies to the questions displayed below.) Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each...
-
Day and Night formed an accounting partnership in 2014. Capital transactions for Day and Night during 2014 are as follows: Partnership net income for the year ended December 31, 2014; is $68,400...
-
Explain why a business like Ford might shift from an offensive strategy to a defensive strategy over the life cycle of a particular product.
-
Journalize the following merchandise transactions: a. Sold merchandise on account, $16,000 with terms 2/10, n/30. The cost of the merchandise sold was $9,600. b. Received payment less the discount.
-
What triggered my secondary emotions?
-
Presented below are two independent situations. Situation A: Annie Lennox Co. reports revenues of $200,000 and operating expenses of $110,000 in its first year of operations, 2008. Accounts...
-
On January 1 , Year 1 , Niagara Corporation arranges a $ 6 , 0 0 0 line of credit with Centennial Bank. It accepted the bank's offer of 1 % above the prime rate with interest payments on December 3 1...
-
View Policies Show Attempt History Current Attempt in Progress The condensed income statement for the Peri and Paul partnership for 2022 is as follows. Peri and Paul Company Income Statement For the...
-
What are the key steps in the private placement process? Be sure to discuss any limitations or restrictions on this equity strategy.
-
What are some of the common misconceptions about financing an entrepreneurial venture? Why do you think these misconceptions are so prevalent?
-
List the core personal values that you intend to bring to your business (e.g., treating people fairly, giving something back to the community).
-
What do you want to be doing? In one year In five years In ten years At retirement
-
What are the major reasons you want to start a business?
-
(a) Calculate the current ratio for each of the following competing companies. (Round your answers to 2 decimal places.) Current Assets Current Liabilities Edison $ 74,000 $ 36,098 MAXT 98,420 86,974...
-
Outline a general process applicable to most control situations. Using this, explain how you would develop a system to control home delivery staff at a local pizza shop.
-
Prepare a flexible budget for planning (Learning Objective 1) Lasting Bubbles produces multicolored bubble solution used for weddings and other events. The companys static budget income statement for...
-
Comprehensive flexible budget, standards, and variances problem (Learning Objectives 2, 3,4, 5) One System assembles PCs and uses flexible budgeting and a standard cost system. One System allocates...
-
Work backward through labor variances (Learning Objective 4) Amandas Music manufactures harmonicas. Amanda uses standard costs to judge performance. Recently, a clerk mistakenly threw away some of...
Study smarter with the SolutionInn App