Prepare the necessary journal entries over the life of bonds

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Question - On January 1, 2020, Usch Company issued its 8%, 5-year convertible debt instrument with a face amount of P 8M, for P 7 700 000. Interest is payable every December 31 of each year. The debt instrument is convertible into 50 000 ordinary shares with a par value of P 100. When the debt instruments were issued, the prevailing market rate of interest for similar debt without conversion option is 10%. On December 31, 2022, all the convertible debt instrument was retired for P 8M. The prevailing rate of interest on a similar debt instrument as of December 31, 2019 is 9% without conversion option. Round off PV factors to three decimal places.

Required -

1. Prepare the amortization table for the bond.

2. Prepare the necessary journal entries over the life of the bond.

Reference no: EM133055370

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