Bond related transaction through journal entries

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Accounting for bond related transaction through journal entries.

(Entries for Conversion, Amortization, and Interest of Bonds) Counter Inc. issued $1,500,000 of convertible 10-year bonds on July 1, 2007. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $34,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Counter Inc.'s $100 par value common stock for each $1,000 of bonds. On August 1, 2008, $150,000 of bonds were turned in for conversion into common. Interest has been accrued monthly and paid as due. At the time of conversion any accrued interest on bonds being converted is paid in cash. Hint: (LO 1) Instructions (Round to nearest dollar) Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates.

a. August 1, 2008. (Assume the book value method is used.)
b. August 31, 2008.
c. December 31, 2008, including closing entries for end-of-year.

Reference no: EM1315109

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