On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3. CONVERTIBLE BONDS - CONVERSION Use the facts in the immediately preceding problem. However, in this case, the entity retires the bonds on January 1, 20x3 at a call premium of $200,000. Without the conversion feature, the bonds are selling on this date at 102. Requirement: Provide the entry to record the retirement of the bonds.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3. CONVERTIBLE BONDS - CONVERSION Use the facts in the immediately preceding problem. However, in this case, the entity retires the bonds on January 1, 20x3 at a call premium of $200,000. Without the conversion feature, the bonds are selling on this date at 102. Requirement: Provide the entry to record the retirement of the bonds.
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