Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help! Thank you! Metlock Inc. issued $2,340,000 of convertible 10 -year bonds on July 1,2025 . The bonds provide for 12% interest payable semiannually

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedPlease help! Thank you!

Metlock Inc. issued $2,340,000 of convertible 10 -year bonds on July 1,2025 . The bonds provide for 12% interest payable semiannually on January 1 and July 1 . The discount in connection with the issue was $52,800, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Metlock Inc.'s $100 par value common stock for each $1,000 of bonds. On August 1, 2026, $234,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (List all debit entries before credit entries. 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 O for the amounts.) a. August 1, 2026. (Assume the book value method is used.) b. August 31, 2026. c. December 31, 2026, including closing entries for end-of-year. No. Date Account Titles and Explanation Debit Credit a. Aug. 1, a. 2026 (To record the issuance of shares of common stock and the write-off of the discount on bonds payable.) Aug. 1, 2026 (To record payment in cash of interest accrued on bonds.) Aug. b. 31, 2026 (To record amortization of discount on bonds.) Aug. 31, 2026 (To record accrual of interest on bonds.) (To record accrual of interest on bonds.) Dec. c. 31, 2026 (To close expense account)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Development Institutions Growth And Poverty Reduction

Authors: Basudeb Guha Khasnobis, George Mavrotas

2008 Edition

0230201776, 978-0230201774

More Books

Students also viewed these Accounting questions

Question

4. Are there any disadvantages?

Answered: 1 week ago

Question

3. What are the main benefits of using more information technology?

Answered: 1 week ago

Question

start to review and develop your employability skills

Answered: 1 week ago