Karen Company showed the following accounts on December 31, 2020. Bonds payable 5,000,000 Premium on bonds payable 250,000 Share capital-250,000 shares authorized and 200,000 shares issued, P50par 10,000,000 Share premium- issuance 2,000,000 Share premium- conversion privilage 500,000 Retained earnings 2,500,000 The bonds are convertible into 10 shares of capital for every P1,000 bond. On December 31, 2020, the entire bond issue was converted and on this date, the market value of the share is 120 and the market value of the bonds is 103. The entity paid P200,000 as a result of the bond conversion. Required: Prepare journal entries for the conversion of the bonds on December 31,2020
Karen Company showed the following accounts on December 31, 2020.
Bonds payable 5,000,000
Premium on bonds payable 250,000
Share capital-250,000 shares authorized
and 200,000 shares issued, P50par 10,000,000
Share premium- issuance 2,000,000
Share premium- conversion privilage 500,000
The bonds are convertible into 10 shares of capital for every P1,000 bond.
On December 31, 2020, the entire bond issue was converted and on this date, the market value of the share is 120 and the market
The entity paid P200,000 as a result of the bond conversion.
Required:
Prepare
Step by step
Solved in 2 steps
