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On July 1, 2018, bondholders converted bonds of Vebbz Corporation with a face value of $90,000 into 1,800 of its no par value common shares. On that date, these shares were being traded at $51 and there was a balance of $3,600 of discount on the bonds remaining unamortized. All interest has been recorded and paid up to that date. When the bonds had been issued, the equity portion of the issue was recorded at $850. The balance of this unamortized discount amounted to 40% of the discount recorded on the date the bonds had been issued. Interest is paid on June 30 and December 31 and the bond discount is being amortized at $675 per interest period. Assume for the 3 following questions that Vebbz is using ASPE.

On July 1, 2018, bondholders converted bonds of Vebbz Corporation with a face value of $90,000 into 1,800 of its no par value common shares. On that date, these shares were being traded at $51 and there was a balance of $3,600 of discount on the bonds remaining unamortized. All interest has been recorded and paid up to that date. When the bonds had been issued, the equity portion of the issue was recorded at $850. The balance of this unamortized discount amounted to 40% of the discount recorded on the date the bonds had been issued. Interest is paid on June 30 and December 31 and the bond discount is being amortized at $675 per interest period. Assume for the 3 following questions that Vebbz is using ASPE.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...
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Use the following given information to answer Questions 30 - 32. On July 1, 2018, bondholders converted bonds of Vebbz Corporation with a face value of $90,000 into 1,800 of its no par value common shares. On that date, these shares were being traded at $51 and there was a balance of $3,600 of discount on the bonds remaining unamortized. All interest has been recorded and paid up to that date. When the bonds had been issued, the equity portion of the issue was recorded at $850. The balance of this unamortized discount amounted to 40% of the discount recorded on the date the bonds had been issued. Interest is paid on June 30 and December 31 and the bond discount is being amortized at $675 per interest period. Assume for the 3 following questions that Vebbz is using ASPE. [30] The journal entry that Vebbz would be required to make to record this conversion transaction would include which of the following a. Common Stock ... CR $87,250 Ob. Common Stock ... CR $81,000; Gain on Conversion of Bonds CR $4,550 c. Common Stock ... CR $81,000; Contributed Surplus - Conversion ... CR $4,550 Od. Common Stock ... CR $81,000; Gain on Conversion of Bonds CR $9,850 e. Cannot be determined from the given data.
Transcribed Image Text:Use the following given information to answer Questions 30 - 32. On July 1, 2018, bondholders converted bonds of Vebbz Corporation with a face value of $90,000 into 1,800 of its no par value common shares. On that date, these shares were being traded at $51 and there was a balance of $3,600 of discount on the bonds remaining unamortized. All interest has been recorded and paid up to that date. When the bonds had been issued, the equity portion of the issue was recorded at $850. The balance of this unamortized discount amounted to 40% of the discount recorded on the date the bonds had been issued. Interest is paid on June 30 and December 31 and the bond discount is being amortized at $675 per interest period. Assume for the 3 following questions that Vebbz is using ASPE. [30] The journal entry that Vebbz would be required to make to record this conversion transaction would include which of the following a. Common Stock ... CR $87,250 Ob. Common Stock ... CR $81,000; Gain on Conversion of Bonds CR $4,550 c. Common Stock ... CR $81,000; Contributed Surplus - Conversion ... CR $4,550 Od. Common Stock ... CR $81,000; Gain on Conversion of Bonds CR $9,850 e. Cannot be determined from the given data.
[31] Determine the date on which the bonds were issued. a. January 1, 2018 Ob. July 1, 2014 c. January 1, 2010 Od. January 1, 2014 e. Cannot be determined from the given data. [32] The journal entry that Vebbz was required to be made when these convertible bonds were issued. a. Cash ... DR $90,850; Bonds Payable... CR $90,000; Contributed Surplus - Conversion CR $850 b. Cash... DR $87,250; Bonds Payable... CR $86,400; Contributed Surplus - Conversion ... CR $850 Oc. Cash ... DR $81,850; Bonds Payable CR $81,000; Contributed Surplus - Conversion ... CR $850 d. Cash... DR $90,850; Bonds Payable... CR $90,850 Oe. Cash ... DR $81,850; Bonds Payable... CR $81,850 O T
Transcribed Image Text:[31] Determine the date on which the bonds were issued. a. January 1, 2018 Ob. July 1, 2014 c. January 1, 2010 Od. January 1, 2014 e. Cannot be determined from the given data. [32] The journal entry that Vebbz was required to be made when these convertible bonds were issued. a. Cash ... DR $90,850; Bonds Payable... CR $90,000; Contributed Surplus - Conversion CR $850 b. Cash... DR $87,250; Bonds Payable... CR $86,400; Contributed Surplus - Conversion ... CR $850 Oc. Cash ... DR $81,850; Bonds Payable CR $81,000; Contributed Surplus - Conversion ... CR $850 d. Cash... DR $90,850; Bonds Payable... CR $90,850 Oe. Cash ... DR $81,850; Bonds Payable... CR $81,850 O T
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