On March 1, Year 1, Exxon Corporation issued $950,000 face value bonds at 103, for 10 years at 6% interest paid annually on March 1. On March 1, Year 7, the bonds were called back at 101.5. The company's end of fiscal accounting period is February 28 of each year. Instructions: 1. Show the balance sheet presentation of the bonds liability on February 28, year 4. 2 Prepare the necessary journal entry (ies) needed on March 1, Year 7. 3. Assume that, instead of calling the bonds on March 1, year 7, the bondholders decided to convert them into shares of common stock. Each bond is convertible into 20 shares of common stock with a par value of $2 per share. The market value per share of common stock was $56 on March 1, year 7. Prepare the journal entry to record this event.

On March 1, Year 1, Exxon Corporation issued $950,000 face value bonds at 103, for 10 years at 6% interest paid annually on March 1. On March 1, Year 7, the bonds were called back at 101.5. The company's end of fiscal accounting period is February 28 of each year. Instructions: 1. Show the balance sheet presentation of the bonds liability on February 28, year 4. 2 Prepare the necessary journal entry (ies) needed on March 1, Year 7. 3. Assume that, instead of calling the bonds on March 1, year 7, the bondholders decided to convert them into shares of common stock. Each bond is convertible into 20 shares of common stock with a par value of $2 per share. The market value per share of common stock was $56 on March 1, year 7. Prepare the journal entry to record this event.

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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