1. On February 1, 2016, Ellison Co. issued eight-year bonds with a face value of $10,000,000...

1. On February 1, 2016, Ellison Co. issued eight-year bonds with a face value of $10,000,000 and a stated interest rate of 4%, payable semiannually on July 1 and January The bonds were sold to yield is 6%. What is the issuance price of the bond? Record the journal entries for February 2016 and issuance at July 1, 2016.

2. Using the information above, assume that the bonds issued by Ellison Co. are convertible with each $1,000 convertible into 25 shares of common stock. Assume that Ellison converts $4,000,000 of bonds on July 1, 2018 into common stock. Prepare the following entries:

a. Entry at February 1, 2016 for issuance of the convertible bonds

b. Entry at July 1, 2018 for the conversion of $4,000,000 of bonds.

Expert Solution

ekkarill92 answered 1 year ago

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