on June 30 and December 31. Each $1,000 debenture can be converted into 4 common shares of Cullumber after December 31, 2021. On January 1, 2022, $464,000 of debentures are converted into common shares, and on March 31, 2022, an additional $464,000 of debentures are converted into common shares. Fair value of Cullumber's common shares is $111 and $116 per share on January 1, 2022, and March 31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis. Cullumber follows ASPE. Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted as a first entry.) a) Dec.31,2021: b)Jan.1,2022: c)Mar.31,2022(to accrue interest and to record the conversion): d)Ju
on June 30 and December 31. Each $1,000 debenture can be converted into 4 common shares of Cullumber after December 31, 2021. On January 1, 2022, $464,000 of debentures are converted into common shares, and on March 31, 2022, an additional $464,000 of debentures are converted into common shares. Fair value of Cullumber's common shares is $111 and $116 per share on January 1, 2022, and March 31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis. Cullumber follows ASPE. Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted as a first entry.) a) Dec.31,2021: b)Jan.1,2022: c)Mar.31,2022(to accrue interest and to record the conversion): d)Ju
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 3C
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Question
On January 1, 2020, Cullumber Corporation issued $8 million of 10–year, 7% convertible debentures at 104. Investment bankers believe that the debenture would have sold at 102 without the conversion privilege. Interest is to be paid semi-annually on June 30 and December 31. Each $1,000 debenture can be converted into 4 common shares of Cullumber after December 31, 2021. On January 1, 2022, $464,000 of debentures are converted into common shares, and on March 31, 2022, an additional $464,000 of debentures are converted into common shares. Fair value of Cullumber's common shares is $111 and $116 per share on January 1, 2022, and March 31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis. Cullumber follows ASPE.
Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted as a first entry.)
a) Dec.31,2021:
b)Jan.1,2022:
c)Mar.31,2022(to accrue interest and to record the conversion):
d)June,30,2022:
DR.
DR.
DR.
CR.
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