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Stonewall Corporation issued $40,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1. a. Provide the entry for Stonewall Corporation on January 1 for the bond issuance. Date Jan, 11 Account Name Date Dec 31 To record bond issuance. Account Name To record bond.conversion. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $125 per share. Use the book value method. V V ✔ Debit V 0 0 0 Debit Credit 0 0 0 0 0 0 0 Credit 0 oooo 0 0

Stonewall Corporation issued $40,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1. a. Provide the entry for Stonewall Corporation on January 1 for the bond issuance. Date Jan, 11 Account Name Date Dec 31 To record bond issuance. Account Name To record bond.conversion. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $125 per share. Use the book value method. V V ✔ Debit V 0 0 0 Debit Credit 0 0 0 0 0 0 0 Credit 0 oooo 0 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Stonewall Corporation issued $40,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1. a. Provide the entry for Stonewall Corporation on January 1 for the bond issuance. Date Jan. 1 Account Name Date Dec. 31 To record bond issuance. Account Name To record bond conversion. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $125 per share. Use the book value method. V V Debit ✓ 0 0 0 Debit oooo Credit 0 0 0 0 Credit 0 0 0 0
Transcribed Image Text:Stonewall Corporation issued $40,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1. a. Provide the entry for Stonewall Corporation on January 1 for the bond issuance. Date Jan. 1 Account Name Date Dec. 31 To record bond issuance. Account Name To record bond conversion. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $125 per share. Use the book value method. V V Debit ✓ 0 0 0 Debit oooo Credit 0 0 0 0 Credit 0 0 0 0
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