Question
In: Accounting
On January 1, 2018, Fowl Products issued $78 million of 8%, 10-year convertible bonds at a...
On January 1, 2018, Fowl Products issued $78 million of 8%,
10-year convertible bonds at a net price of $79.4 million. Fowl
recently issued similar, but nonconvertible, bonds at 98 (that is,
98% of face amount). The bonds pay interest on June 30 and December
31. Each $1,000 bond is convertible into 30 shares of Fowl’s no par
common stock. Fowl records interest by the straight-line
method.
On June 1, 2020, Fowl notified bondholders of its intent to call
the bonds at face value plus a 1% call premium on July 1, 2020. By
June 30 all bondholders had chosen to convert their bonds into
shares as of the interest payment date. On June 30, Fowl paid the
semiannual interest and issued the requisite number of shares for
the bonds being converted.
Required:
1. Prepare the journal entry for the issuance of
the bonds by Fowl.
2. Prepare the journal entry for the June 30,
2018, interest payment.
3. Prepare the journal entries for the June 30,
2020, interest payment by Fowl and the conversion of the bonds
(book value method).
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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Required:
1.
Prepare the journal
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