On January 1, 2024, Blue issued 10-year, $320,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Blue $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2025. (Ignore all tax effects.) (a) Assume that 75% of the holders of Blue's convertible bonds convert their bonds to stock on June 30, 2026, when Blue's stock is trading at $32 per share. Blue pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the conversion. (List all debit entries before credit entries. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
On January 1, 2024, Blue issued 10-year, $320,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Blue $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2025. (Ignore all tax effects.) (a) Assume that 75% of the holders of Blue's convertible bonds convert their bonds to stock on June 30, 2026, when Blue's stock is trading at $32 per share. Blue pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the conversion. (List all debit entries before credit entries. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Ee.51.
Transcribed Image Text:On January 1, 2024, Blue issued 10-year, $320,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Blue
$2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout
its life. None of the bonds have been converted as of the end of 2025. (Ignore all tax effects.)
(a)
Sha
Assume that 75% of the holders of Blue's convertible bonds convert their bonds to stock on June 30, 2026, when Blue's stock is
trading at $32 per share. Blue pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the
conversion. (List all debit entries before credit entries. If no entry is required, select "No entry" for the account titles and enter O for
the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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