Kingbird Inc. issued $2,100,000 of convertible 10- year bonds on july 1,2020. The bonds provide for 12% interest payable semiannually on January 1 and july 1. The discount in connection with the issues was $51,600, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 9 shares of Kingbird Inc's $100 par value common stock for each $1000 of bonds. On August (1,2021,$210,000 of bonds were returned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization and interest in connection with the bonds as of the following dates. (a) August 1,2020. (Assume the book value method is used). (b) August 31, 2021. (c) December 31,2021, including closing entries for the end of year.
Kingbird Inc. issued $2,100,000 of convertible 10- year bonds on july 1,2020. The bonds provide for 12% interest payable semiannually on January 1 and july 1. The discount in connection with the issues was $51,600, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 9 shares of Kingbird Inc's $100 par value common stock for each $1000 of bonds. On August (1,2021,$210,000 of bonds were returned in for conversion into common stock. Interest has been accrued monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization and interest in connection with the bonds as of the following dates. (a) August 1,2020. (Assume the book value method is used). (b) August 31, 2021. (c) December 31,2021, including closing entries for the end of year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Kingbird Inc. issued $2,100,000 of convertible 10-
year bonds on july 1,2020. The bonds provide for 12%
interest payable semiannually on January 1 and july
1. The discount in connection with the issues was
$51,600, which is being amortized monthly on a
straight-line basis. The bonds are convertible after
one year into 9 shares of Kingbird Inc's $100 par
value common stock for each $1000 of bonds. On
August (1,2021,$210,000 of bonds were returned in
for conversion into common stock. Interest has been
accrued monthly and paid as due. At the time of
conversion, any accrued interest on bonds being
converted is paid in cash. Prepare the journal entries
to record the conversion, amortization and interest
in connection with the bonds as of the following
dates. (a) August 1,2020. ( Assume the book value
method is used). (b) August 31, 2021. (c) December
31,2021, including closing entries for the end of year.
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