Exercise 16-6
On January 1, 2017, Marigold Corporation issued $4,380,000 of
10-year, 9% convertible debentures at 104. Interest is to be paid
semiannually on June 30 and December 31. Each $1,000 debenture can
be converted into 8 shares of Marigold Corporation $102 par value
common stock after December 31, 2018.
On January 1, 2019, $438,000 of debentures are converted into
common stock, which is then selling at $112. An additional $438,000
of debentures are converted on March 31, 2019. 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 for:
(a) | December 31, 2018. | (c) | March 31, 2019. | |||
(b) | January 1, 2019. | (d) | June 30, 2019. |
Record the conversions using the book value method.
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