Reference no: EM131211292
On January 1, 2014, Gottlieb Corporation issued $3,460,000 of 10-year, 9% convertible debentures at 103. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be converted into 8 shares of Gottlieb Corporation $102 par value common stock after December 31, 2015.
On January 1, 2016, $346,000 of debentures are converted into common stock, which is then selling at $114. An additional $346,000 of debentures are converted on March 31, 2016. The market price of the common stock is then $119. Accrued interest at March 31 will be paid on the next interest date.
Bond premium is amortized on a straight-line basis.
Make the necessary journal entries for:
(a) December 31, 2015.
(b) January 1, 2016.
(c) March 31, 2016.
(d) June 30, 2016.
Record the conversions using the book value method.
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