Prepare the journal entry to record the conversion of bonds

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Question - Southbound Inc. prepares its financial statements in accordance with IFRS. On January 1: 2023, the company issued $15.0 million 9%. Eight-year convertible bonds that pay interest semi-annually on June 30 and December 31. At the option of the bondholder, and at any time before maturity, each $1,000 bond was convertible into 25 of Southbound Inc's common shares. Southbound raised $15.1 million from the sale of the bonds. At the time of the sale, the market rate of interest for similar bonds without the conversion feature was 10%.

On January 1, 2025, $6.0 million of the bonds were converted. The market price of Southbound Inc's common shares at the time of conversion was $42 per share.

Required -

a. Prepare the journal entry to record the issuance of convertible bonds.

b. Prepare the journal entry to record the conversion of the bonds.

Reference no: EM133273986

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