Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Presented below are three independent situations. 1. Longbine Corporation redeemed $132,000 face value, 13% bonds on June 30, 2017, at 107. The carrying value of
Presented below are three independent situations.
1. Longbine Corporation redeemed $132,000 face value, 13% bonds on June 30, 2017, at 107. The carrying value of the bonds at the redemption date was $117,500. The bonds pay annual interest, and the interest payment due on June 30, 2017, has been made and recorded. | ||
2. Tastove Inc. redeemed $170,000 face value, 18% bonds on June 30, 2017, at 98. The carrying value of the bonds at the redemption date was $171,000. The bonds pay annual interest, and the interest payment due on June 30, 2017, has been made and recorded. | ||
3. Precision Company has $87,000, 8%, 12-year convertible bonds outstanding. These bonds were sold at face value and pay annual interest on December 31 of each year. The bonds are convertible into 35 shares of Precision $10 par value common stock for each $1,000 worth of bonds. On December 31, 2017, after the bond interest has been paid, $22,000 face value bonds were converted. The market price of Precision common stock was $41 per share on December 31, 2017. |
For each independent situation above, prepare the appropriate journal entry for the redemption or conversion of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. Date Account Titles and Explanation Debit Credit 1. June 30 Bonds Payable 132,000 Loss on Bond Redemption 18,460 Discount on Bonds Paya 14,500 Cash 135,960 2, June 30 Bonds Payable 170,000 Premium on Bonds Payable 1,000 Gain on Bond Redempti 4,400 Cash 166,600 3.T Dec. 31 Bonds Payable 22,000 Common Stock 7,700 Paid-in Capital in Exces 14,300Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started