(Issuance and Conversion of Bonds) For each of the unrelated transactions described below, present the entry(ies) required to record each transaction. 1. Ehrlich Corp. issued $50,000,000 par value 8% convertible bonds at 102. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at par. 2. On October 31, 2021, Ehrlich Corp. called its 10% convertible debenture bonds for conversion. The $60,000,000 par value bonds were converted into 600,000 shares of $1 par value common stock. On October 31, there was $155,000 of unamortized premium applicable to the bonds, and the company paid an additional $355,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. 3. Ehrlich Corporation issued 2,000 shares of $10 par value common stock upon conversion of 1,000 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share. The common stock is trading at $26 per share at the time of conversion. Record the conversion of the preferred stock.
(Issuance and Conversion of Bonds) For each of the unrelated transactions described below,
present the entry(ies) required to record each transaction.
1. Ehrlich Corp. issued $50,000,000 par
company’s investment banker estimates they would have been sold at par.
2. On October 31, 2021, Ehrlich Corp. called its 10% convertible debenture bonds for conversion. The $60,000,000 par
value bonds were converted into 600,000 shares of $1 par value common stock. On October 31, there was $155,000
of unamortized premium applicable to the bonds, and the company paid an additional $355,000 to the bondholders to
induce conversion of all the bonds. The company records the conversion using the book value method.
3. Ehrlich Corporation issued 2,000 shares of $10 par value common stock upon conversion of 1,000 shares of $50 par value
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