Reference no: EM132754589

On January 1st, 20X0 Mousa S. Butt Limited issued $10,000,000 of 10-year 10.0% debenture at 105. Investment bankers believe that the debentures would have sold at 102 without the conversion privilege. Interest is to be paid semi-annually on June 30th and December 31. Each $1,000 debenture can be converted into ten of Mousa S. Butt Limited's no-par common shares after December 31, 20X1. The company elects to segregate the conversion seperately similar to the IFRS requirement, 20X3 $2,000,000 of the debentures are converted into common shares, which were selling at $88.00. An additional $3,000,000 of the debentures are converted on March 31, 20X3. The market price of the common shares is then $96.00. Accrued interest at March will be paid when the bond is converted. The bond premium is to be amortized on a straight-line basis,

Problem 1: Prepare the journal entries on December 31, 20X1.

Problem 2: Prepare the journal entries on January 1, 20X3, assuming the cost basis.

Problem 3: Prepare the journal entries on March 31, 20X3, assuming the cost basis.

Problem 4: Prepare the journal entries on June 30, 20X3.