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can it be answered with an expalnation please?

can it be answered with an expalnation please?

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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Ee 480.

can it be answered with an expalnation please? On July 1, 2024, when its $1 par value common stock was selling for $66 per share, Teal Corp. issued $24,800,000 of 6% convertible debentures due in 10 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 10 shares of the corporation's common stock. The debentures were issued for $26,288,000. The corporation believes the difference between the par value and the amount paid is attributable to the conversion feature. On January 1, 2025, the corporation's common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2026, when the corporation's $0.50 par value common stock was selling for $38 per share, holders of 9,920 of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cash Premium on Bonds Payable Bonds Payable Account Titles and Explanation Bonds Payable Premium on Bonds Payable Common Stock Debit (b) Prepare in general journal form the entry to record the exercise of the conversion option, using the book value method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Paid-in Capital in Excess of Par - Common Stock 26288000 Credit Debit 1488000 24800000 Credit
Transcribed Image Text:can it be answered with an expalnation please? On July 1, 2024, when its $1 par value common stock was selling for $66 per share, Teal Corp. issued $24,800,000 of 6% convertible debentures due in 10 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 10 shares of the corporation's common stock. The debentures were issued for $26,288,000. The corporation believes the difference between the par value and the amount paid is attributable to the conversion feature. On January 1, 2025, the corporation's common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2026, when the corporation's $0.50 par value common stock was selling for $38 per share, holders of 9,920 of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Cash Premium on Bonds Payable Bonds Payable Account Titles and Explanation Bonds Payable Premium on Bonds Payable Common Stock Debit (b) Prepare in general journal form the entry to record the exercise of the conversion option, using the book value method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Paid-in Capital in Excess of Par - Common Stock 26288000 Credit Debit 1488000 24800000 Credit
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