Question

On December 31, 2019, the balance sheet of Red Stout Corporation reported bonds

outstanding with a face value of $2,000,000 and a related unamortized premium

of $60,000. Interest is payable semiannually on January 1 and July 1.

A) Prepare an entry in journal form without explanations to record the

retirement of bonds with a face value of $1,200,000 on January 1, 2020,

assuming the bonds were redeemed at a call price of 104.

B) Prepare an entry in journal

form without explanation on January 1, 2020, to record the conversion of bonds

with a face value of $800,000 into common stock. Each $1,000 bond is

convertible into 30 shares of $20 par value common stock.

Answer 1

Given details follows below:

Red Stout Corporation reported bonds

outstanding with a face value of = $2,000,000

Related unamortized premium

of = $60,000

a) Preparing an entry in journal form without explanations to record.

Retirement of bonds with a face value of = $1,200,000

call price of = 104

Transaction	Date	Account Titles	Debit	Credit
			$	$
a.	January 1, 2020	Bonds Payable	1,200,000
		Premium on Bonds Payable	36,000
		Loss on Redemption of Bonds	12,000
		Cash		1,248,000
b. Preparing an entry in journal on January 1, 2020, a face value of $800,000 into common stock. Each $1,000 bond isconvertible into 30 shares of $20 par value common stock.	January 1, 2020	Bonds Payable	800,000
		Premium on Bonds Payable	24,000
		Common Stock		480,000
		Paid-in Capital in Excess of Par: Common Stock		344,000

Explanation:

a)1,200,000 + 36,000 + 12,000

=1,248,000

b) Calculating Common stock

= 800,000 / 1,000 x 30 x $ 20)

Calculating paid in captial

= 824,000 - 480,000

= $344,000

Any doubt comment below i will explain or resolve until you got....
PLEASE.....UPVOTE....ITS REALLY HELPS ME....THANK YOU....SOOO MUCH....