Reference no: EM132837942

On January 1, 2021, Madison Products issued $41.1 million of 8%, 10n-year convertible bonds at a net price of $42.01 million. Madison recently issued similar, but non-convertible bonds at 99 ( that is, 99% of face amount). The bonds pays interest on June 30 and December 31. Each $1000 bond is convertible into 30 shares of Madison's no par common stock, Madison records interest by the straight-line method.

• On June 1, 2023, Masison notified bondholders of its intent to call the bonds at face value plus 1% call premium on July 1, 2023. By June 30, Madison paid the semiannual interest and issued the requisite number of shares for the bonds being converted.

Problem 1: Prepare the journal entries for the issuance of bonds by Madison and interest payment for June 30, 2021

Problem 2: Prepare the journal entries for June 30, 2023, interest payment by Madison and the conversion of the bonds ( book-value method)