On January 1, 2014, Walter Corporation issued $3,330,000 of 10-year, 9% converti
ID: 2426436 • Letter: O
Question
On January 1, 2014, Walter Corporation issued $3,330,000 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 Walter Corporation $104 par value common stock after December 31, 2015.
On January 1, 2016, $333,000 of debentures are converted into common stock, which is then selling at $115. An additional $333,000 of debentures are converted on March 31, 2016. The market price of the common stock is then $118. 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 (enter the correct values) for:
(a) December 31, 2015 b) January 1, 2016 c) March 31, 2016 d) June 30, 2016
Record conversions using the book value method. Round answers to 0 decimal places, e.g. 5,275
(a) December 31, 2015:
Bond Interest Expense....................................... ?
Premium on Bonds Payable............................... ?
Cash.................................................................. ?
(B) January 1, 2016:
Bonds Payable............................................................ ?
Premium on Bonds Payable...................................... ?
Common Stock............................................. ?
Paid-in Capital in Excess of Par................. ?
(C) March 31, 2016:
Bond Interest Expense............................................... ?
Premium on Bonds Payable...................................... ?
Bond Interest Payable................................. ?
Bonds Payable..................................................... ?
Premium on Bonds Payable............................... ?
Common Stock............................................. ?
Paid-in Capital in Excess of Par................. ?
(D) June 30, 2016:
Bond Interest Expense............................................... ?
Premium on Bonds Payable...................................... ?
Bond Interest Payable................................................ ?
Cash............................................................... ?
Explanation / Answer
Date Particulars Amount (in $) Debit Credit 31.12.2015 Bond Interest Expense 144855.00 Premium on Bonds Payable 4995.00 Cash 149850.00 01.01.2016 Bonds Payable 333000.00 Premium on Bonds Payable 7992.00 Common Stock 306360.00 Paid-in Capital in Excess of Par 34632.00 31.03.2016 Bond Interest Expense 64935.00 Premium on Bonds Payable 2498.00 Bond Interest Payable 67433.00 31.03.2016 Bonds Payable 333000.00 Premium on Bonds Payable 7742.00 Common Stock 314352.00 Paid-in Capital in Excess of Par 23390.00 30.06.2016 Bond Interest Expense 59940.00 Premium on Bonds Payable 1998.00 Bond Interest Payable 67433.00 Cash 129371.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.