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The balance sheet of Eastern Post Corporation as of December 31, 2020, included 10% bonds having a face amount of $40 million. The bonds have
The balance sheet of Eastern Post Corporation as of December 31, 2020, included 10% bonds having a face amount of $40 million. The bonds have a remaining premium of $6 million at December 31, 2020. On January 1, 2021, Eastern Post Corporation called the bonds before their scheduled maturity at the call price of 102. Required: Prepare the journal entry on January 1, 2021, to record the redemption of the bonds. On January 1, 2021, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. Gless recently issued similar, but nonconvertible, bonds at 99. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless's no par common stock. Gless records interest by the straight-line method. On June 1, 2024, Gless notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2024. By June 30, all bondholders had chosen to convert their bonds into shares as of the interest payment date. On June 30, Gless paid the semiannual interest and issued the requisite number of shares for the bonds being converted, Required: ho 1. Prepare the journal entry for the issuance of the bonds by Gless. 2. Prepare the journal entry for the June 30, 2021, interest payment. 3. Prepare the journal entries for the June 30, 2024, interest payment by Gless and the conversion of the bonds (book value method)
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