Blue Inc. issued $3,570,000 par value, 7% convertible bonds at 98 for cash. If t

Question

Blue Inc. issued $3,570,000 par value, 7% convertible bonds at 98 for cash. If the bonds had not included the conversion feature, they would have sold for 95.

Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation

Debit

Credit

Account Titles and Explanation

Debit

Credit

Explanation / Answer

Journal entry

Date

Particulars

Debit

Credit

Cash (3,570,000*98%)

$3,498,600

Discount on Bonds
($3,570,000*(100%-98%)

$71,400

To Bonds payable a/c

$3,570,000

(Being bonds issued at discount recorded)

Journal entry

Date

Particulars

Debit

Credit

Cash (3,570,000*98%)

$3,498,600

Discount on Bonds
($3,570,000*(100%-98%)

$71,400

To Bonds payable a/c

$3,570,000

(Being bonds issued at discount recorded)

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