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

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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