Question
In: Accounting
Exercise 14-24 Convertible bonds [LO14-5] On January 1, 2018, Gless Textiles issued $11 million of 8%,...
Exercise 14-24 Convertible bonds [LO14-5]
On January 1, 2018, Gless Textiles issued $11 million of 8%,
20-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 20% of the issue as an investment.
Required:
1. Prepare the journal entries for the issuance of the bonds by
Gless and the purchase of the bond investment by Century.
2. Prepare the journal entries for the June 30, 2022, interest
payment by both Gless and Century assuming both use the
straight-line method.
3. On July 1, 2023, when Gless’s common stock had a market price of
$33 per share, Century converted the bonds it held. Prepare the
journal entries by both Gless and Century for the conversion of the
bonds (book value method).
Solutions
ekkarill92 answered 2 years agoRelated Solutions
On January 1, 2018, Gless Textiles issued $14 million of 7%, 20-year convertible bonds at 101....
On January 1, 2018, Gless Textiles issued $14 million of 7%,
20-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 20% of the issue as an investment.
Required:
1. Prepare the journal entries for...
On January 1, 2018, Gless Textiles issued $13.5 million of 8%, 10-year convertible bonds at 102....
On January 1, 2018, Gless Textiles issued $13.5 million of 8%,
10-year convertible bonds at 102. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 50 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 98 (that is, 98% of face amount). Century Services
purchased 9% of the issue as an investment.
Required:
Assume Gless Textiles prepares its financial...
On January 1, 2018, Gless Textiles issued $19 million of 8%, 10-year convertible bonds at 101....
On January 1, 2018, Gless Textiles issued $19 million of 8%,
10-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 15% of the issue as an investment.
Required: 1. Prepare the journal entries for...
On January 1, 2018, Gless Textiles issued $18 million of 7%, 10-year convertible bonds at 101....
On January 1, 2018, Gless Textiles issued $18 million of 7%,
10-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 10% of the issue as an investment.
Required:
1. Prepare the journal entries for...
On January 1, 2018, Gless Textiles issued $10 million of 7%, 20-year convertible bonds at 101....
On January 1, 2018, Gless Textiles issued $10 million of 7%,
20-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 15% of the issue as an investment.
Required:
1. Prepare the journal entries for...
On January 1, 2021, Gless Textiles issued $29 million of 8%, 20-year convertible bonds at 101....
On January 1, 2021, Gless Textiles issued $29 million of 8%,
20-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 10% of the issue as an investment.
Required:
1. Prepare the journal entries for...
On January 1, 2016, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101....
On January 1, 2016,
Gless Textiles issued $21 million of 10%, 10-year convertible bonds
at 101. The bonds pay interest on June 30 and December 31. Each
$1,000 bond is convertible into 40 shares of Gless’s no par common
stock. Bonds that are similar in all respects, except that they are
nonconvertible, currently are selling at 99 (that is, 99% of face
amount). Century Services purchased 15% of the issue as an
investment.
Required:
1.
Prepare the journal
entries for...
On January 1, 2021, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101....
On January 1, 2021, Gless Textiles issued $21 million of 10%,
10-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 15% of the issue as an investment.
Required:
1. Prepare the journal entries for...
On January 1, 2016, Gless Textiles issued $10 million of 7%, 20-year convertible bonds at 101....
On January 1, 2016, Gless Textiles issued $10 million of 7%,
20-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 15% of the issue as an investment. Required: 1. Prepare
the journal entries for...
On January 1, 2021, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101....
On January 1, 2021, Gless Textiles issued $12 million of 9%,
10-year convertible bonds at 101. The bonds pay interest on June 30
and December 31. Each $1,000 bond is convertible into 40 shares of
Gless’s no par common stock. Bonds that are similar in all
respects, except that they are nonconvertible, currently are
selling at 99 (that is, 99% of face amount). Century Services
purchased 10% of the issue as an investment. Required: 1. Prepare
the journal entries for...
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