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Journalize the entries related to the bonds transactions

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Reference no: EM132835927

On January 1, 2014, A Bocelli Corp. issued a 6 year, 8% convertible bond with face value of P3,000,000 for P3,500,000. The bond entitles the holder the option to convert the holdings into 30,000 ordinary shares of the company at P100 par. The conversion option is valid until the maturity of the bond. A similar instrument without conversion option has a market rate of 10%.

  1. Dec. 31, 2016, 1/3 of the bonds were retired at P97.
  2. Dec. 31, 2018 1/2 of the bonds outstanding were converted, incurring P80,000 conversion cost.
  3. Dec. 31, 2019, remaining bonds were fully paid without conversion

Problem 1. Journalize the entries related to the bonds transactions in 2014.

Problem 2. Determine the carrying value of the bond right after Dec. 31, 2016.

Problem 3. Determine the amount of gain or loss during retirement in Dec. 31, 2016.

Problem 4. Determine the share premium issuance in Dec. 31, 2018 transaction.

Problem 5. What is the carrying value of the bonds prior to retirement in Dec. 31, 2019?

Reference no: EM132835927

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