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Prepare the journal entries for interest expense

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Problem - On 1 January 20x1, XYZ Ltd. Issues $1,500,000 face amount of 9%, six-year, convertible debentures. Interest is payable semi-annually on 30 June and 31 December. The debentures are convertible at the investor's option at the rate of 30 common shares for each $1000 bond at any time after 31 December 20x3. The market rate of interest for nonconvertible bonds of similar risk and maturity is 11%. The net proceeds received by XYZ amounted to 1,750,000.

1. Record the issuance of the bonds on 1 January 20x1.

2. Prepare the journal entries for interest expense on 30 June 20x1 and 31 December 20x1. XYZ uses effective interest amortization for bond premium and discount.

Reference no: EM132898766

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