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On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid n cash at the time of conversion. (a) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount ed at insurance. (Round to nearest dollar.) recognized a Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.

On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid n cash at the time of conversion. (a) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount ed at insurance. (Round to nearest dollar.) recognized a Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.

FINANCIAL ACCOUNTING
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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Teal Inc. issued $15,200,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bonds were dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight-line basis. On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Your answer is partially correct. (b) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount recognized at insurance. (Round to nearest dollar.) Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (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. Round answers to O decimal place, e.g. 5,125. List all debit entries before credit entries.) No. Account Titles and Explanation Debit Credit (a) Interest Payable Interest Expense Discount on Bonds Payable Cash Bonds Payable Discount on Bonds Payable Common Stock Paid-in Capital in Excess of Par - Common Stock 608000 305916 7600000 1916 912000 161339 56000 442153
Transcribed Image Text:Teal Inc. issued $15,200,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bonds were dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight-line basis. On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Your answer is partially correct. (b) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount recognized at insurance. (Round to nearest dollar.) Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (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. Round answers to O decimal place, e.g. 5,125. List all debit entries before credit entries.) No. Account Titles and Explanation Debit Credit (a) Interest Payable Interest Expense Discount on Bonds Payable Cash Bonds Payable Discount on Bonds Payable Common Stock Paid-in Capital in Excess of Par - Common Stock 608000 305916 7600000 1916 912000 161339 56000 442153
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