On January 1, 2016, Gless Textiles issued $17 million of 10%, 20-year convertibl
ID: 2394214 • Letter: O
Question
On January 1, 2016, Gless Textiles issued $17 million of 10%, 20-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless’s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 20% of the issue as an investment.
Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century.(Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Prepare the journal entries for the June 30, 2020, interest payment by both Gless and Century assuming both use the straight-line method. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On July 1, 2021, when Gless’s common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method). (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On January 1, 2016, Gless Textiles issued $17 million of 10%, 20-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless’s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 20% of the issue as an investment.
Explanation / Answer
(A)
(B)
(C)
Date Account titles and Explanation Debit ($) Credit ($) January 01, 2016 Cash 17170000 Convertible bonds payable 17000000 Premium on bonds payable 170000 January 01, 2016 Investment in convertible bonds 3400000 Premium on bond investment 34000 Cash 3434000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.