On January 1, 2023, JBD Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500. JBD received $51,300 for the bond issue. The bonds paid interest every December 31 at 7%; the market interest rate for bonds with a comparable level of risk was 7.50%. The bonds were convertible to common shares at a rate of 10 common shares per bond. JBD amortized bond premiums and discounts using the effective interest method, and the company's year-end was December 31. JBD 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 $30,690 due to a decrease in market interest rates, a conversion inducement of $27/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. C. Prepare the journal entry at January 1, 2023. Prepare the journal entry at December 31, 2023. Prepare the journal entry at January 1, 2024.

On January 1, 2023, JBD Corporation issued a series of 100 convertible bonds, maturing in 5 years. The face amount of each bond was $500. JBD received $51,300 for the bond issue. The bonds paid interest every December 31 at 7%; the market interest rate for bonds with a comparable level of risk was 7.50%. The bonds were convertible to common shares at a rate of 10 common shares per bond. JBD amortized bond premiums and discounts using the effective interest method, and the company's year-end was December 31. JBD 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 $30,690 due to a decrease in market interest rates, a conversion inducement of $27/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. C. Prepare the journal entry at January 1, 2023. Prepare the journal entry at December 31, 2023. Prepare the journal entry at January 1, 2024.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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Similar questions

Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
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