Prepare the journal entry to record the repurchase

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Problem - Issuance and Repurchase of Convertible Bonds - Angela Corporation issues 2,000 convertible bonds at January 1, 2011. The bonds have a three year life, and are issued at par with a face value of E1,000 per bond, giving total proceeds of $2,000,000. Interest is payable annually at 6 percent. Each bond is convertible into 250 ordinary shares (par value of (1). When the bonds are issued, the market rate of interest for similar debt without the conversion option is 8%.

(a) Compute the liability and equity component of the convertible bond on January 1, 2011.

(b) Prepare the journal entry to record the issuance of the convertible bond on January 1, 2011.

(c) Prepare the journal entry to record the repurchase of the convertible bond for cash at January 1, 2014, its maturity date.

Reference no: EM132918078

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