E16-2 (Conversion of Bonds) Aubrey Inc, Issued $4,000,000 of 10%, 10 yeaar convertible bonds on June, 1, 2007
ANSWER KEY E16-2 (Conversion of Bonds) Aubrey Inc
E16-2 Conversion of Bonds SOLUTION
E16-2 (Conversion of Bonds) Aubrey Inc, Issued $4,000,000 of 10%, 10 yeaar convertible bonds on June, 1, 2007, at 98plus accrued interest. The bonds were dated April 1, 2007, which interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight line basis. on april 1,2008, $1,500,000 of these bonds were converted into 30,000 shares of $20 per value common stock. Arrued interest was paid in cash at the time of conversion.
instructions
(a) prepare the entry record the interest expense at October 1 2007. Assume that acrued interest payable was credited when the bonds were issued. (Round to nearest Dollar).
(b) prepare the entry(ies) to the record the conversion on April 1, 2008.(Book value method is used. Assume that the entry to record amortization of the bond discount and interest payable has been made.
instructions
(a) prepare the entry record the interest expense at October 1 2007. Assume that acrued interest payable was credited when the bonds were issued. (Round to nearest Dollar).
(b) prepare the entry(ies) to the record the conversion on April 1, 2008.(Book value method is used. Assume that the entry to record amortization of the bond discount and interest payable has been made.
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