PRAHA Company issued a Convertible Bond on 1 January 2020. The following information about the Convertible Bond is available:

• Face Value = $5,000,000; Life: 4 years; Interest: Annual on 31 December;
• Issued at $102 per $100 Nominal
• Stated rate (coupon): 4%;
• Assume an effective rate (Yield) of 5% (this is the rate on equivalent non-convertible bonds)
• Convertible Into: 800,000 Ordinary Shares with a par value of $1 each
• The Present Value (PV) Factor for [N=4 and Yield = 5%] is 0.823. The Annuity Factor [N = 4 and Yield = 5%] = 3.55 (use these EXACT figures in your calculations).

When recording the January 1 2020 transaction, what is the correct journal entry with respect to CASH?

Select one:

a. None of these answers

b. CREDIT $5,000,000

c. DEBIT $5,100,000

d. DEBIT $5,000,000

e. CREDIT $5,100,000

When recording the January 1 2020 transaction, what is the correct journal entry with respect to BONDS PAYABLE?

Select one:

a. None of these answers

b. DEBIT $4,650,500

c. DEBIT $4,825,000

d. CREDIT $4,825,000

e. CREDIT $4,650,500

When recording the January 1 2020 transaction, what is the correct journal entry with respect to SHARE PREMIUM - CONVERSION EQUITY?

Select one:

a. DEBIT $250,000

b. CREDIT $275,000

c. CREDIT $250,000

d. DEBIT $275,000

e. None of these answers

Assume the Bond is Converted into shares at the end of Year 4 of the Bond's life. On that date, what is the correct journal entry with respect to SHARE CAPITAL - ORDINARY?

Select one:

a. DEBIT $800,000

b. CREDIT $5,000,000

c. DEBIT $5,000,000

d. None of these answers

e. CREDIT $800,000

Assume the Bond is Converted into shares at the end of Year 4 of the Bond's life. On that date, what is the correct journal entry with respect to SHARE PREMIUM - ORDINARY?

Select one:

a. DEBIT $4,500,000

b. CREDIT $4,475,000

c. None of these answers

d. DEBIT $4,475,000

e. CREDIT $4,500,000