On July 1, 2019, when its $1 par value common stock was selling for $66 per share, Marin Corp, issued $25,800,000 of 6% convertible debentures due in 10 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 10 shares of the corporation's common stock. The debentures were issued for $27,348,000. The corporation believes the difference between the par value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation's common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation's $0.50 par value common stock was selling for $38 per share, holders of 10,320 of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
On July 1, 2019, when its $1 par value common stock was selling for $66 per share, Marin Corp, issued $25,800,000 of 6% convertible debentures due in 10 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 10 shares of the corporation's common stock. The debentures were issued for $27,348,000. The corporation believes the difference between the par value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation's common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation's $0.50 par value common stock was selling for $38 per share, holders of 10,320 of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On July 1, 2019, when its $1 par value common stock was selling for $66 per share, Marin Corp, issued $25,800,000 of 6% convertible
debentures due in 10 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 10 shares of the
corporation's common stock. The debentures were issued for $27,348,000. The corporation believes the difference between the par
value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation's common stock was split 2
for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation's $0.50 par value
common stock was selling for $38 per share, holders of 10,320 of the convertible debentures exercised their conversion options. The
corporation uses the straight-line method for amortizing any bond discounts or premiums.
(a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (Credit account titles are
automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and
enter O for the amounts.)
Account Titles and Explanation
Cash
Premium on Bonds Payable
Debit
27348000
Credit
25800000
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