Provide the entry to record the retirement of the bonds

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Question - Convertible bonds - retirement - On Jan 1,20x1, an entity issues bonds with face amount of P5,000,000 for 5,200,000. The bonds mature on Dec 31,20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On Jan 1,20x1, the bonds are selling at 101 without thr conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on Jan 1, 20x3.

Use the facts above. However, in this case, the entity retires the bonds on Jan 1,20x3 at a call premium of P200,000. Without the conversion feature, the bonds are selling in this date at 102.

Provide the entry to record the retirement of the bonds.

Reference no: EM132991161

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