Question

On December​ 31, 2018​, Tugaboo Corporation issues 5​%, 10​-year convertible bonds payable with a face value of $ 5 comma 000 comma 000. The semiannual interest dates are June 30 and December 31. The market interest rate is 6​%. Tugaboo amortizes bond discounts using the​ effective-interest method.

1.
Use the PV function in Excel Superscript ® to calculate the issue price of the bonds.
2.
Prepare an​ effective-interest method amortization table for the first four semiannual interest periods.
3.
Journalize the following​ transactions:
a.
Issuance of the bonds on December​ 31, 2018. Credit Convertible Bonds Payable.
b.
Payment of interest and amortization of the bond discount on June​ 30, 2019.
c.
Payment of interest and amortization of the bond discount on December​ 31, 2019.
d.
Conversion by the bondholders on July​ 1, 2020​, of bonds with a total face value of $ 2000000 into 120000 shares of Tugaboo​'s ​$1-par common stock.
4.
Show how Tugaboo would report the remaining bonds payable on its balance sheet at December​ 31, 2020.

Requirement 1. Use the PV function in Excel Superscript ®Excel®to calculate the issue price of the bonds. ​(Round your answer to the nearest whole​ dollar.)

The issue price of the bonds is $

.

Requirement 2. Prepare an​ effective-interest method amortization table for the first four semiannual interest periods. ​(Round your answers to the nearest whole​ dollar.)

Tugaboo Corporation
Amortization Table
Semiannual	Interest		Discount	Discount Account	Bond Carrying
Interest Date	Payment	Interest Expense	Amortization	Balance	Amount
12-31-2018

6-30-2019

12-31-2019

6-30-2020

12-31-2020

Requirement 3. Journalize the following transactions. ​(Record debits​ first, then credits. Exclude explanations from all journal​ entries.)

a. Record the issuance of the bonds on December​ 31,

20182018.

Credit Convertible Bonds Payable. ​(Round your answers to the nearest whole​ dollar.)

  

Journal Entry
Date		Accounts	Debit	Credit
2018
Dec	31

b. Record the payment of interest and amortization of the bonds on June​ 30,

20192019.

​(Round your answers to the nearest whole​ dollar.)

Journal Entry
Date		Accounts	Debit	Credit
2019
Jun	30

c. Record the payment of interest and amortization of the bonds on December​ 31,

20192019.

​(Round your answers to the nearest whole​ dollar.)

Journal Entry
Date		Accounts	Debit	Credit
2019
Dec	31

d. Record the conversion by the bondholders on July​ 1,

20202020​,

of bonds with a total face value of

$ 2 comma 000 comma 000$2,000,000

into

120 comma 000120,000

shares of

TugabooTugaboo​'s

​$1-par common stock. ​(Round your answers to the nearest whole​ dollar.)

Journal Entry
Date		Accounts	Debit	Credit
2020
Jul	1

Requirement 4. Show how

TugabooTugaboo

would report the remaining bonds payable on its balance sheet at December​ 31,

20202020.

​(Calculate the discount by multiplying the discount calculated in the original amortization table by the fraction of bonds remaining. Round your answers to the nearest whole​ dollar.)

Tugaboo Corporation
Partial Balance Sheet
December 31, 2020
	Less:

Answer 1