37 Cullumber Electric sold $7,680,000, 10%, 10-year bonds on January 1, 2022. The bonds were dated January 1, 2022, and paid interest annually on January 1. The bonds were sold at 98. a Prepare the journal entry to record the issuance of the bonds on January 1, 2022. b At December 31, 2022, $15,360 of the Discount on Bonds Payable account has been amortized. Show the balance sheet presentation of the long-term liability at December 31, 2022. c On January 1, 2024, when the carrying value of the bonds was $7,557,120, the company redeemed the bonds at 102. Record the redemption of the bonds assuming that interest for the period has already been paid.
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
![37 Cullumber Electric sold $7,680,000, 10%, 10-year bonds on January 1, 2022. The bonds
were dated January 1, 2022, and paid interest annually on January 1. The bonds were
sold at 98.
a Prepare the journal entry to record the issuance of the bonds on January 1, 2022.
100A
b At December 31, 2022, $15,360 of the Discount on Bonds Payable account has been
amortized. Show the balance sheet presentation of the long-term liability at December
31, 2022.
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above
Common
c On January 1, 2024, when the carrying value of the bonds was $7,557,120, the
company redeemed the bonds at 102. Record the redemption of the bonds assuming
that interest for the period has already been paid.
Stock, Common
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yd (beaU) bably
Tawoft deco
350
38 On January 1, Stunt Corp. had outstanding convertible bonds with a face value of
$1,000,000 and an unamortized discount of $100,000. On that date, the bonds were
converted into 100,000 shares of $1 par stock. The market value on the date of
conversion was $12 per share. The transaction will be accounted for with the book valu
method. Prepare the journal entry to record the conversion of the bond.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7e20ff25-5262-4f46-b3b4-c7594ea65bc5%2F5e230d2b-3852-44dd-bbf4-ed24ef858f92%2Fwa2xgu_processed.jpeg&w=3840&q=75)
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