5 Convertible Bonds with Beneficial Conversion Option (7 points) On 1/1/2018, Hu

Question

5 Convertible Bonds with Beneficial Conversion Option (7 points) On 1/1/2018, Husky, Inc. issues $20,000,000 of five-year, 1% convertible bonds at par. Each $1,000 bond in the issue converts to 20 shares of S1 par value common stock at the option of the bondholder beginning two years after issue. The market price of Husky's common stock on the date of issue is S54 and interest is paid annually each December 31. Assume that half of the bonds were converted on 1/1/2020 and at that date the carrying value (net book value) of the entire issue of convertible bonds is $19,000,000. Required: Prepare the journal entry for issuance of Husky's convertible bonds on 1/1/2018. (3 points) a. b. Prepare the journal entry for conversion of half of the convertible bonds on 1/1/2020.(4 points)

Explanation / Answer

a. Journal Entry for issuance of Bond:

b.Journal entry for conversion of Bond:

01-01-2018 Cash/ Bank A/c Dr          2,00,00,000 Bond Payable A/c Cr          2,00,00,000

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.