Homework Help is Here – Start Your Trial Now!
Business
Accounting
(b) Bonds Payable Discount on Bonds Payable Common Stock Paid-in Capital in Excess of Par-Common Stock eTextbook and Media 8050000 176965 56000 7817035

(b) Bonds Payable Discount on Bonds Payable Common Stock Paid-in Capital in Excess of Par-Common Stock eTextbook and Media 8050000 176965 56000 7817035

Intermediate Accounting: Reporting And Analysis
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
See similar textbooks
icon
Related questions
Question

Do not give answer in image 

(b) Bonds Payable Discount on Bonds Payable Common Stock Paid-in Capital in Excess of Par-Common Stock eTextbook and Media 8050000 176965 56000 7817035
Transcribed Image Text:(b) Bonds Payable Discount on Bonds Payable Common Stock Paid-in Capital in Excess of Par-Common Stock eTextbook and Media 8050000 176965 56000 7817035
Pearl Inc. issued $16,100,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bonds were dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight-line basis. On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due: debit Interest Payable for the amount recognized at insurance. (Round to nearest dollar) Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (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. Round answers to O decimal place, e.g. 5,125. List all debit entries before credit entries) No. Account Titles and Explanation (a) Interest Payable Interest Expense Debit 644000 324000 Credit
Transcribed Image Text:Pearl Inc. issued $16,100,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bonds were dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight-line basis. On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due: debit Interest Payable for the amount recognized at insurance. (Round to nearest dollar) Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (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. Round answers to O decimal place, e.g. 5,125. List all debit entries before credit entries) No. Account Titles and Explanation (a) Interest Payable Interest Expense Debit 644000 324000 Credit
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
SEE MORE TEXTBOOKS