On January 1, 2023, Weddings-R-Us Inc. raised $5.5 million by issuing $5 million of 4%, eight-year convertiblebonds maturing on January 1, 2031. Interest was paid semi-annually on June 30 and December 31. Each $1,000bond could be converted into 32 no par value common shares. In addition, each $1,000 bond included 40detachable common stock warrants with an exercise price of $35 each. Immediately after issuance, the warrants,which expire on January 1, 2031, traded at $3 each on the open market. Similar non-convertible bonds issuedwithout warrants were yielding 5% at that time.On July 1, 2027, warrant holders exercised 80% of the warrants. The shares of Weddings-R-Us traded at $40 eachon that day.On July 1, 2028, bondholders converted 70% of the bonds to common shares. The interest payment had beenmade on June 30, 2028, in the normal fashion. The shares of Weddings-R-Us traded at $42 each on that day.Weddings-R-Us prepares its financial statements in accordance with IFRS.J1 Required:23 Prepare journal entries to record:45 a. The issuance of the convertible bonds on January 1, 2023.5 b. Payment of interest and related amortization on June 30, 2023.7 c. Exercise of the warrants on July 1, 2027.

For accounting purposes, journal entries are a necessary requirement for recording transactions as…

Answered: On January 1, 2023, Weddings-R-Us Inc.…

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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