Problem 3

Windsor Casino issued $2,000,000, 6% convertible bonds on Jan 1, 20X1 for $1,910,000. Interest would be paid semi-annually on July 1 and Jan 1. These bonds would mature on Jan 1, 20X9, and be convertible at the investors option after Jan 1, 20X4 into common shares of the company at the rate of 100 shares for each $1,000 in face (par) value.

The underwriters pointed out that had the bonds not been convertible , the bonds would have been issued to yield 8%.

Required

1. Provide the journal entry to record the issurance of bonds on Jan 1, 20X1
2. Prepare the bond amortization table for the first four interest payments only .

3. The convertible bonds were repurchased at 94 and retired on Jan 1, 20X3 after the interest due on that day was paid. The repurchase price would have been 91 if the bonds hadnt been convertible. Prepare the journal entries for the bond retirement.