2) On January 1, 2020, CBT Corp issued 20,000, 20 year, $1,000 bonds. The bonds have an annual coupon of $50, payable on December 31 of each year. Each bond can be convertible in to five common shares. The bonds sold for 120 and it is estimated that the bonds would have sold for 105 if they did not have the convertible option. Required: a. Prepare the journal entry to recognize the bond sale made by CBT on January 1, 2020. b. On January 1, 2023, 2,000 bonds were converted into common shares. Prepare the journal entry to recognize the conversion transaction.

2) On January 1, 2020, CBT Corp issued 20,000, 20 year, $1,000 bonds. The bonds have an annual coupon of $50, payable on December 31 of each year. Each bond can be convertible in to five common shares. The bonds sold for 120 and it is estimated that the bonds would have sold for 105 if they did not have the convertible option. Required: a. Prepare the journal entry to recognize the bond sale made by CBT on January 1, 2020. b. On January 1, 2023, 2,000 bonds were converted into common shares. Prepare the journal entry to recognize the conversion transaction.

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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