Presented below are three independent situations:(a) Ball Corporation purchased $380,000 of its bonds on June 30, 2017, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $371,500. The bonds pay annual interest and the interest payment due on June 30, 2017, has been made and recorded.(b) Horton, Inc. purchased $400,000 of its bonds at 96 on June 30, 2017, and immediately retired them. The carrying value of the bonds on the retirement date was $395,000. The bonds pay annual interest and the interest payment due on June 30, 2017, has been made and recorded.(c) Valley Company has $80,000, 10%, 12-year convertible bonds outstanding. These bonds were sold at face value and pay annual interest on December 31 of each year. The bonds are convertible into 40 shares of Valley $4 par value common stock for each $1,000 par value bond. On December 31, 2017, after the bond interest has been paid, $30,000 par value of bonds were converted. The market value of Valley’s common stock was $38 per share on December 31, 2017.For each of the independent situations, prepare the journal entry to record the retirement or conversion of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) DateAccount Titles and ExplanationDebitCredit(a)June 30 (b)June 30 (c)Dec. 31

Journal entry represents the entry that records the financial transactions at the initial level.

Answered: Ball Corporation purchased $380,000 of…

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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Presented below are three independent situations:

(a)		Ball Corporation purchased $380,000 of its bonds on June 30, 2017, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $371,500. The bonds pay annual interest and the interest payment due on June 30, 2017, has been made and recorded.
(b)		Horton, Inc. purchased $400,000 of its bonds at 96 on June 30, 2017, and immediately retired them. The carrying value of the bonds on the retirement date was $395,000. The bonds pay annual interest and the interest payment due on June 30, 2017, has been made and recorded.
(c)		Valley Company has $80,000, 10%, 12-year convertible bonds outstanding. These bonds were sold at face value and pay annual interest on December 31 of each year. The bonds are convertible into 40 shares of Valley $4 par value common stock for each $1,000 par value bond. On December 31, 2017, after the bond interest has been paid, $30,000 par value of bonds were converted. The market value of Valley’s common stock was $38 per share on December 31, 2017.

For each of the independent situations, prepare the journal entry to record the retirement or conversion of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

	Date	Account Titles and Explanation	Debit	Credit
(a)	June 30



(b)	June 30



(c)	Dec. 31

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