Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please include work i would like to understand! thank you :) - Your answer is partially correct. Larkspur Inc. issued $2.340,000 of convertible 10-year bonds

please include work i would like to understand! thank you :)
image text in transcribed
image text in transcribed
image text in transcribed
- Your answer is partially correct. Larkspur Inc. issued $2.340,000 of convertible 10-year bonds on July 1, 2020. 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 Larkspur Inc's $100 par value common stock for each $1,000 of bonds. On August 1, 2021. $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. (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 for the amounts.) (a) (b) August 1, 2021. (Assume the book value method is used.) August 31, 2021 December 31, 2021, including closing entries for end-of-year. (c) Debit Credit No. Date Account Titles and Explanation Aug 234,000 Ronds Pavable (a) Aug. 1. Bonds Payable 2021 234.000 Discount on Bonds Payable Common Stock Paid-in Capital in Excess of Par. Common Stock (To record the issuance of shares of common stock and the write-off of the discount on bonds payable.) Aug. 1, 2021 Interest Payable Cash (To record payment in cash of interest accrued on bonds.) IDUNT III II III Aug (b) 31. 2021 Bond Conversion Expense Discount on Bonds Payable (To record amortization of discount on bonds.) Aug 31. 2021 Bond Conversion Expense Cash (To record payment in cash of interest accrued on bonds.) Aug (b) 31, 2021 Bond Conversion Expense Discount on Bonds Payable (To record amortization of discount on bonds.) IIIIIII UTILIO Aug 31. 2021 Bond Conversion Expense Interest Payable (To record accrual of interest on bonds.) Dec. (c) 31 2021 Income Summary Bond Conversion Expense (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

Effective Internal Auditing

Authors: Manuel E. Peña-Rodríguez

1st Edition

1736742922, 978-1736742921

More Books

Students also viewed these Accounting questions

Question

Explain how the "cure period" is used in the calculation of CVA.

Answered: 1 week ago