On January 1, 2023, BDM Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500.BDM received $51,400 for the bond issue. The bonds paid interest every December 31 at 8%; the market interest rate for bonds with a comparable level of risk was 8.50%. The bonds were convertible to common shares at a rate of 12 common shares per bond. BDM amortized bond premiums and discounts using the effective interest method, and the company's year-end was December 31.BDM follows ASPE. On January 1, 2024, 20 of the bonds were converted into common shares. On June 30, 2024, another 20 bonds were converted into common shares. The bondholders chose to forfelt the accrued interest on these bonds. On January 1, 2025, when the fair value of the bonds was $30,750 due to a decrease in market interest rates, a conversion inducement of $30/bond was offered to the remaining bondholders to convert their bonds to common shares. All of the remaining 60 bonds were converted into common shares at this time. b. C d. f. Prepare the journal entry at January 1, 2023. Prepare the journal entry at December 31, 2023. Prepare the journal entry at January 1, 2024. Prepare the journal entry at June 30, 2024. Prepare the journal entry at December 31, 2024. Prepare the journal entry at January 1, 2025.
On January 1, 2023, BDM Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500.BDM received $51,400 for the bond issue. The bonds paid interest every December 31 at 8%; the market interest rate for bonds with a comparable level of risk was 8.50%. The bonds were convertible to common shares at a rate of 12 common shares per bond. BDM amortized bond premiums and discounts using the effective interest method, and the company's year-end was December 31.BDM follows ASPE. On January 1, 2024, 20 of the bonds were converted into common shares. On June 30, 2024, another 20 bonds were converted into common shares. The bondholders chose to forfelt the accrued interest on these bonds. On January 1, 2025, when the fair value of the bonds was $30,750 due to a decrease in market interest rates, a conversion inducement of $30/bond was offered to the remaining bondholders to convert their bonds to common shares. All of the remaining 60 bonds were converted into common shares at this time. b. C d. f. Prepare the journal entry at January 1, 2023. Prepare the journal entry at December 31, 2023. Prepare the journal entry at January 1, 2024. Prepare the journal entry at June 30, 2024. Prepare the journal entry at December 31, 2024. Prepare the journal entry at January 1, 2025.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:On January 1, 2023, BDM Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond
was $500.BDM received $51,400 for the bond issue. The bonds paid interest every December 31 at 8%; the market interest rate for
bonds with a comparable level of risk was 8.50%. The bonds were convertible to common shares at a rate of 12 common shares per
bond. BDM amortized bond premiums and discounts using the effective interest method, and the company's year-end was December
31. BDM follows ASPE.
On January 1, 2024, 20 of the bonds were converted into common shares. On June 30, 2024, another 20 bonds were converted into
common shares. The bondholders chose to forfeit the accrued interest on these bonds.
On January 1, 2025, when the fair value of the bonds was $30,750 due to a decrease in market interest rates, a conversion inducement
of $30/bond was offered to the remaining bondholders to convert their bonds to common shares. All of the remaining 60 bonds were
converted into common shares at this time.
a.
b.
d.
f.
Prepare the journal entry at January 1, 2023.
Prepare the journal entry at December 31, 2023.
Prepare the journal entry at January 1, 2024.
Prepare the journal entry at June 30, 2024.
Prepare the journal entry at December 31, 2024.
Prepare the journal entry at January 1, 2025.
Date
January 1, 2023
December 31, 2023
January 1, 2024
Jun 30, 2024
December 31, 2024
January 1, 2025
Account Titles and Explanation
Cash
Bands Payabic
Contributed Surplus Conversion Rights
Interest Expense
Bonds Payable
Bonds Payable
Contributed Surplus Conversion Rights
Comman Shares
Interest Expense
Bonds Pavable
Cash
Bonds Payable
Loss on Redemption of Bonds
Contributed Surplus - Conversion Rights
Retained Earnings
Common Shares
Cash
Debit
51,400
Credit
SUPPO
50.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education