On January 1, 2017, Desert Windows Corporation issued $1,000,000 of 15-year, 12% convertible debentures at 110....

On January 1, 2017, Desert Windows Corporation issued $1,000,000 of 15-year, 12% convertible debentures at 110. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be converted into four shares of Desert Windows Corporation $5 par value common stock after December 31, 2018.

On January 1, 2019, $400,000 of the debentures is converted into common stock, which is then selling at $300. An additional $400,000 of the debentures is converted on May 31, 2019. The market price of the common stock is then $310. Accrued interest at May 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis.

Required: Make the necessary journal entries for:

(a) December 31, 2018.

(b) January 1, 2019.

(d) June 30, 2019.

Record the conversions using the book value method.

Solutions

Expert Solution

Refer to the below images for the above mentioned questions in a detailed way of solution.

ekkarill92 answered 1 year ago

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