On December 31, 2016, ABC Corp. issues $50,000,000 of 5%, 25-year, convertible bonds for total proceeds of $39,000,000.Interest payments are made on December31 each year. Record the issuance of the convertible debt if the market rate of interest of similarly risk-rated, non-convertible debt is 7%. Required: Record the journal entry to convert common shares if on December 31, 2018, 45%of the bonds are converted.
On December 31, 2016, ABC Corp. issues $50,000,000 of 5%, 25-year, convertible bonds for total proceeds of $39,000,000.Interest payments are made on December31 each year. Record the issuance of the convertible debt if the market rate of interest of similarly risk-rated, non-convertible debt is 7%. Required: Record the journal entry to convert common shares if on December 31, 2018, 45%of the bonds are converted.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![On December 31, 2016, ABC Corp. issues $50,000,000 of 5%, 25-year, convertible bonds for total proceeds
of $39,000,000.lnterest payments are made on December31 each year. Record the issuance of the
convertible debt if the market rate of interest of similarly risk-rated, non-convertible debt is 7%.
Required:
Record the journal entry to convert common shares if on December 31, 2018, 45%of the bonds are
converted.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0f6fca59-358e-4d49-b24e-1752b104c86e%2F4b0ddc20-82cc-46e1-b01e-ffbe9147b71c%2F361xalc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On December 31, 2016, ABC Corp. issues $50,000,000 of 5%, 25-year, convertible bonds for total proceeds
of $39,000,000.lnterest payments are made on December31 each year. Record the issuance of the
convertible debt if the market rate of interest of similarly risk-rated, non-convertible debt is 7%.
Required:
Record the journal entry to convert common shares if on December 31, 2018, 45%of the bonds are
converted.
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