value of the bonds on the retirement date was $371,500. The bonds pay annual ann

Question

value of the bonds on the retirement date was $371,500. The bonds pay annual annual interest (a) Stike Corporation purchased $380,000 of its bonds on June 30, 2015, at 102 and immediately retired them. The carrying nterest and the interest payment due on June 30, 2015, has been made and recorded (b) wWerthe, Ine gurhed (c and the interest payment due on June 30, 2015, has been made and recorded Mountain Compar y has S80,000 10% 12 year convertit le bonds otstanding. These bords were sold at ace value and pay annual rre convertible into 40 shares of Mountain $4 par value common stock for each $1,000 par value bond. On December 31, 2015, after the bond interest has been paid, $30,000 par value of bonds were n ts bo t daely retired them. The cahh value of the bonds on the retirement date was $395,000. The bonds pay dte w en h e on June 30 and December 31 of each year. The bonds are d Derriert of ch yow market value of Mountain's comemon stock was $38 per share on December 31, 2013. entered. Do not account titles are automatkally indented when amount for each of the independent situations, prepare the yournal entry to record the retirement or conversion of the bonds(Creit account titles are automatically indent manually.) Date Account Titles and Explanation (a) June 30 (b) June 30 ) Dec. 31 versson 4.1

Explanation / Answer

Date Account Title Dr $ Cr$ June 30. Bond Payable              380,000 Dicount on Bond Payable                  8,500 Cash             387,600 Loss on Retirement of Bonds                16,100 (retirement of bond by Strike Corp) June 30. Bond Payable              400,000 Dicount on Bond Payable                  5,000 Cash             384,000 Gain on Retirement of Bonds               11,000 (retirement of bond by Worton Inc) Bond value of conversion                30,000 No of shares to be issued @40 no per $1000 bond value                  1,200 Par value of 1200 shares @4=                  4,800 Date Account Title Dr $ Cr$ Dec 31.2015. Bond Payable                30,000 Common Stock ($4par)                  4,800 Additional Paid in Capital               25,200

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