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Record the journal entry for the conversion of the bonds

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Reference no: EM133075281

Question - On January 1, 2014, Luna Corporation issued 1,000 10-year, 6% convertible bonds with a par value of $1,000. Each bond may be converted into 200 common shares. Similar bonds trading on the market carry an interest rate of 9%. Interest is paid annually on December 31.

REQUIRED -

a) Record the journal entry for the bond issuance on January 1, 2014.

b) Record the journal entry for the conversion of the bonds into common shares on January 1, 2015. Assume that $45,900 of the discount on the bonds remains to be amortized.

Reference no: EM133075281

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