On January 1, 2024, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless's no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment. Required: 1. Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. 2. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight-line method. 3. On July 1, 2029, when Gless's common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method). Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight-line method. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars. No Date 1 June 30, 2028 Interest expense Premium on bonds payable Cash General Journal Show less A Debit Credit 1,044,750x 5,250 1,050,000
On January 1, 2024, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless's no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment. Required: 1. Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. 2. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight-line method. 3. On July 1, 2029, when Gless's common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method). Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight-line method. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars. No Date 1 June 30, 2028 Interest expense Premium on bonds payable Cash General Journal Show less A Debit Credit 1,044,750x 5,250 1,050,000
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 10QE
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Transcribed Image Text:On January 1, 2024, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101.
The bonds pay interest on June 30 and December 31.
Each $1,000 bond is convertible into 40 shares of Gless's no par common stock.
Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face
amount).
Century Services purchased 15% of the issue as an investment.
Required:
1. Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century.
2. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the
straight-line method.
3. On July 1, 2029, when Gless's common stock had a market price of $33 per share, Century converted the bonds it held.
Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method).
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the
straight-line method.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your
answers in whole dollars.
No
Date
1
June 30, 2028
Interest expense
Premium on bonds payable
Cash
General Journal
Show less A
Debit
Credit
1,044,750x
5,250
1,050,000
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