On January 1, 2020, Oriole Corporation issued $6 million of 10-year, 7% convertible debentures at 106. Investment bankers believe that the debenture would have sold at 103 without the conversion privilege, Interest is to be paid semi-annually on June 30 and December 31. Each $1,000 debenture can be converted into 5 common shares of Oriole after December 31, 2021. On January 1, 2022, $414,000 of debentures are converted into common shares, and on March 31, 2022, an additional $414,000 of debentures are converted into common shares. Fair value of Oriole's common shares is $111 and $116 per share on January 1, 2022, and March 31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight- line basis. Oriole follows ASPE. (a) Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted
On January 1, 2020, Oriole Corporation issued $6 million of 10-year, 7% convertible debentures at 106. Investment bankers believe that the debenture would have sold at 103 without the conversion privilege, Interest is to be paid semi-annually on June 30 and December 31. Each $1,000 debenture can be converted into 5 common shares of Oriole after December 31, 2021. On January 1, 2022, $414,000 of debentures are converted into common shares, and on March 31, 2022, an additional $414,000 of debentures are converted into common shares. Fair value of Oriole's common shares is $111 and $116 per share on January 1, 2022, and March 31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight- line basis. Oriole follows ASPE. (a) Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Current Attempt in Progress
On January 1, 2020, Oriole Corporation issued $6 million of 10-year, 7% convertible debentures at 106. Investment bankers believe
that the debenture would have sold at 103 without the conversion privilege. Interest is to be paid semi-annually on June 30 and
December 31. Each $1,000 debenture can be converted into 5 common shares of Oriole after December 31, 2021. On January 1,
2022, $414,000 of debentures are converted into common shares, and on March 31, 2022, an additional $414,000 of debentures
are converted into common shares. Fair value of Oriole's common shares is $111 and $116 per share on January 1, 2022, and March
31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-
line basis. Oriole follows ASPE.
(a)
Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted
as a first entry.) (Credit account titles are automaticaly indented when the amount is entered. Do not indent manually. Round Intermediate
percentage calculations to 3 decimal places, eg. 1.246% and final answers to O declmat places, e.g. 5,275.)
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