Presented below are three independent situations: (a) Rolex Corporation purchase

Question

Presented below are three independent situations: (a) Rolex Corporation purchased $350,000 of its bonds on June 30, 2017, at 104 and immediately retired them. The carrying value of the bonds on the retirement date was $371,000. The bonds pay annual interest and the interest payment due on June 30, 2017, has been made and recorded. (b) Corpuz, Inc. purchased $300,000 of its bonds at 98 on June 30, 2017, and immediately retired them. The carrying value of the bonds on the retirement date was $275,000. The bonds pay annual interest and the interest payment due on June 30, 2017, has been made and recorded. (c) Niko Compan y has $75,000, 15%, 15-year convertible bonds outstanding. These bonds were sold at face value and are convertible into 30 shares of Ritz $9 par value pay annual interest on December 31 of each year. The bonds common stock for each $1,000 par value bond. On December 31, 2017 , after the bond interest has been paid, $20,000 par value of bonds was converted. The market value of Valley's common stock was $38 per share on December 31, 2017. Instructions For each independent situation above, prepare the appropriate journal entry for the redemption or conversion of the bonds. Note: Write clearly and use complete account names [Do not abbreviatel. General Journal J1 Date Account Titles and Explanation Ref. Debit Credit

Explanation / Answer

S.NO. DATE ACCOUNT TITLES AND EXPLANATION REF NO. DR($) CR($) 2017 1) JUNE30 BONDS PAYABLE DR 350000 BONDS PREMIUM DR 21000 TO CASH A/C 364000 TO GAIN ON BONDS REDEMPTION 7000 (BEING BONDS REDEEMED) 2) JUNE30 BONDS PAYABLE A/C DR 300000 LOSS ON BONDS REDEMPTION A/C 19000 TO CASH A/C 294000 TO DISCOUNT ON BONDS A/C 25000 (BEING BONDS REDEEMED) 3) DEC31 BONDS PAYABLE A/C DR 20000 TO PAID IN CAPITAL IN EXCESS OF PAR VALUE A/C 17500 TO COMMON STOCK A/C 2500 (BEING BONDS CONVERTED )

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