Reference no: EM132940109
Question - On January 2, 2020, the DT Inc. issued P2,000,000 of 8% convertible bonds at par. The bonds will mature on January 1, 2025 and interest is payable anually every January 1. The bond contract entitles the bondholders to receive 6 shares of P100 par value common stock in exchange for each P1,000 bond. On the date of issue, the prevailing market interest rate for similar debt without the conversion option is 10%.
On December 31, 2021, the holders of the bonds with total face value of P1,000,000 exercised their conversion privilege. In addition, the company reacquired at 110, bonds with a face value of P500,000.
The balances in the capital accounts as of December 31, 2020 were:
Common stock, P100 par, authorized 50,000 shares, issued and outstanding, 30,000 shares P3,000,000
Premium on common stock 500,000
Market value of the common stock and bonds were as follows:
Date Bonds Common stock
December 31, 2020 118 40
December 31, 2021 110 42
The entry to record the conversion on December 31, 2021 will include a credit to APIC of:
How much is the carrying value of the bonds payable as of December 31, 2020?
How much is the carrying value of the bonds payable as of January 1, 2022?
How much is the interest expense for the year 2021?
How much is the interest expense for the year 2023?
How much is the carrying value of the bonds payable as of December 31, 2022?
How much is the loss on bond reacquisition on December 31, 2021?
How much of the proceeds from the issuance of convertible bonds should be allocated to equity?
How much is the carrying value of the bonds payable as of December 31, 2024?
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