Question # 4

For each of the unrelated situations described below, prepare the entries required to record the transactions.

On August 1, 2017, Alpha Corporation called its 10% convertible bonds for conversion. The $4,000,000 par value bonds were converted into 160,000 no par common shares. On August 1, there was $350,000 of unamortized premium applicable to the bonds. At the time of issuance, Contributed SurplusConversion Rights was credited for $150,000, which represented the equity portion of the convertible bonds, and the market value of the common shares was $20 per share.

The company records the conversion using the book value method. Ignore all interest payments.