Reference no: EM132021452
Problem - On January 1, 2015: Acme company issued 100 ($1000 par) 6% semi-annual 9 year convertible bonds when the market rate of interest was 8%.
a) Make the journal entry on 1/1/15 when Acme issued/sold the bonds.
b) Make the journal entry Acme makes on 06/30 when it makes it's first interest payment (they use effective interest method)
On January 1, 2019: 1/2 of the bonds were converted into common stock by the bondholders. Each bond was converted into 50 shares of Acme $1 par stock when the stock was selling for $44 per share. On 1/1/19, the value in "Discount on Bonds Payable" was $24,000.
c) Make the journal entry Acme makes on 1/1/19 when 1/2 of the bonds are converted into stock.
On January 1, 2020: Acme retired the remaining 1/2 of the bonds buying them at 99. on 1/1/20, the value in "Discount on Bonds Payable" was $16,000.
d) Make the journal entry Acme makes on 1/1/20 when the other 1/2 of the bonds are retired by Acme.