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On September 30, 2020, Pharoah Inc. issued $4,200,000 of 10-year, 7% convertible bonds for $4,788,000. The bonds pay interest on March 31 and September 30
On September 30, 2020, Pharoah Inc. issued $4,200,000 of 10-year, 7% convertible bonds for $4,788,000. The bonds pay interest on March 31 and September 30 and mature on September 30, 2030. Each $1,000 bond can be converted into 80 no par value common shares. In addition, each bond included 20 detachable warrants. Each warrant can be used to purchase one common share at an exercise price of $14. Immediately after the bond issuance, the warrants traded at $2.80 each. Without the warrants and the conversion rights, the bonds would have been expected to sell for $4,406,000. On March 23, 2023, half of the warrants were exercised. The common shares of Pharoah Inc. were trading at $20 each on this day. Immediately after the payment of interest on the bonds, on September 30, 2025, all bonds outstanding were converted into common shares. Assume the entity follows IFRS. (a) Your answer has been saved. See score details after the due date. Prepare the journal entry to record the issuance of the bonds on September 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit eptember 30, 2020 Cash 4788000 Bonds Payable 4406000 Contributed Surplus - Stock Warrants 235200 Contributed solu Convercin Dichte 11680 Prepare a bond amortization schedule from September 30, 2020, to September 30, 2025, using the effective interest rate. (Round answers to 0 decimal places, e.g. 5,275.) Schedule of Bond Premium Amortization Effective Interest Method Cash Effective Premium Date Paid Interest Amortized Sept. 30, 2020 Mar. 31, 2021 $ $ $ Sept. 30, 2021 Mar. 31, 2022 Sept. 30, 2022 Mar. 31, 2023 Sept. 30, 2023 Mar. 31, 2024 Prepare a bond amortization schedule from September 30, 2020, to September 30, 2025, using the effective interest rate. (Round answers to 0 decimal places, e.g. 5,275.) Schedule of Bond Premium Amortization Effective Interest Method Effective Cash Premium Carrying Paid Interest Amortized Amount $ $ ta Sept. 30, 2020 Mar. 31, 2021 $ Sept. 30, 2021 Mar. 31, 2022 Sept. 30, 2022 Mar. 31, 2023 Sept. 30, 2023 Mar. 31, 2024 Sept. 30, 2024 Mar. 31, 2025 Sept. 30, 2025
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