Question 1

On 1/1/20X1, Illini issues $20,000 face amount 10% ordinary convertible bonds maturing 12/31/20X3. The bonds are issued at the face amount. Interest is paid semiannually on June 30 and December 31. Each $25 bond can be converted into one share of $1 par common stock of Illini. On 1/1/20X2, half of the convertible bonds are converted into Illini’s common stock.

Date	Account Name (Debit)	Account Name (Credit)	Debit	Credit
1/1/20X1	Cash		[A]
		Bonds payable		[B]
6/30/20X1	Interest expense		[C]
		Cash		[D]
12/31/20X1	Interest expense		[E]
		Cash		[F]
1/1/20X2	Bonds payable		[G]
		Common stock		[H]
		APIC		[I]
6/30/20X2	Interest expense		[J]
		Cash		[K]
12/31/20X2	Interest expense		[L]
		Cash		[M]