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Carla Vista Corp. offers three-year, 6% convertible bonds (par $1,000). Each $1,000 bond may be converted into 145 common shares, which are currently trading at $3 per share. Similar straight bonds carry an interest rate of 9%. 1,000 bonds are issued at par. The Contributed Surplus - Conversion rights amounted to be $75,939. Carla Vista Corp. decides to retire the convertible debt early and offers the bondholders $1,070,100 cash, which is the fair value of the instrument at the time of early retirement. The fair value of the bond (excluding the conversion feature) is $982,500 and the carrying value is $972,700. Assume ASPE is followed. Prepare the journal entry to record the retirement of the convertible debt. (Credit account titles are automatically indented when the 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 Debit Credit

Carla Vista Corp. offers three-year, 6% convertible bonds (par $1,000). Each $1,000 bond may be converted into 145 common shares, which are currently trading at $3 per share. Similar straight bonds carry an interest rate of 9%. 1,000 bonds are issued at par. The Contributed Surplus - Conversion rights amounted to be $75,939. Carla Vista Corp. decides to retire the convertible debt early and offers the bondholders $1,070,100 cash, which is the fair value of the instrument at the time of early retirement. The fair value of the bond (excluding the conversion feature) is $982,500 and the carrying value is $972,700. Assume ASPE is followed. Prepare the journal entry to record the retirement of the convertible debt. (Credit account titles are automatically indented when the 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 Debit Credit

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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Carla Vista Corp. offers three-year, 6% convertible bonds (par $1,000). Each $1,000 bond may be converted into 145 common shares, which are currently trading at $3 per share. Similar straight bonds carry an interest rate of 9%. 1,000 bonds are issued at par. The Contributed Surplus - Conversion rights amounted to be $75,939. Carla Vista Corp. decides to retire the convertible debt early and offers the bondholders $1,070,100 cash, which is the fair value of the instrument at the time of early retirement. The fair value of the bond (excluding the conversion feature) is $982,500 and the carrying value is $972,700. Assume ASPE is followed. Prepare the journal entry to record the retirement of the convertible debt. (Credit account titles are automatically indented when the 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 Debit Credit
Transcribed Image Text:Carla Vista Corp. offers three-year, 6% convertible bonds (par $1,000). Each $1,000 bond may be converted into 145 common shares, which are currently trading at $3 per share. Similar straight bonds carry an interest rate of 9%. 1,000 bonds are issued at par. The Contributed Surplus - Conversion rights amounted to be $75,939. Carla Vista Corp. decides to retire the convertible debt early and offers the bondholders $1,070,100 cash, which is the fair value of the instrument at the time of early retirement. The fair value of the bond (excluding the conversion feature) is $982,500 and the carrying value is $972,700. Assume ASPE is followed. Prepare the journal entry to record the retirement of the convertible debt. (Credit account titles are automatically indented when the 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 Debit Credit
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