Reference no: EM132067146
Question - Janenda Inc. issued $5,000,000 of convertible 5-year bonds on July 1, 2014. The bonds provide for 6% interest payable semi annually on January 1 and July 1. The discount in connection with the issue was $120,000, which is being amortized monthly on a straight-line basis.
The bonds are convertible after one year into 15 shares of Janenda Inc.'s $1 par value common stock for each $1,000 of bonds.
On October 1, 2015, $600,000 of bonds were turned in for conversion into common stock. 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.
Instructions
Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (Round to the nearest dollar.)
(a) October 1, 2015. (Assume the book value method is used.)
(b) October 31, 2015.
(c) December 31, 2015, including closing entries for end-of-year.
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