Splish Inc. issued $3,180,000 of convertible 10-year bonds on July 1, 2025. The bonds provide for 13% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Splish Inc.'s $100 par value common stock for each $1,000 of bonds. On August 1, 2026, $318,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) b. C. August 1, 2026. (Assume the book value method is used.) August 31, 2026. December 31, 2026, including closing entries for end-of-year.
Splish Inc. issued $3,180,000 of convertible 10-year bonds on July 1, 2025. The bonds provide for 13% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Splish Inc.'s $100 par value common stock for each $1,000 of bonds. On August 1, 2026, $318,000 of bonds were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) b. C. August 1, 2026. (Assume the book value method is used.) August 31, 2026. December 31, 2026, including closing entries for end-of-year.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 9P
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