Prepare the entry to record the interest expense at October 1, 2023, by pro-rating the number of months. Start by calculating the effective rate on the bonds using (1) a financial calculator or (2) Excel functions. Assume that interest payable was credited when the bonds were issued. (Credit account titles are automatically indented when the amount is entered. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Do not indent manually. Round effective interest rate to 4 decimal places, e.g. 3.5275% and final answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.)
Prepare the entry to record the interest expense at October 1, 2023, by pro-rating the number of months. Start by calculating the effective rate on the bonds using (1) a financial calculator or (2) Excel functions. Assume that interest payable was credited when the bonds were issued. (Credit account titles are automatically indented when the amount is entered. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Do not indent manually. Round effective interest rate to 4 decimal places, e.g. 3.5275% and final answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.)
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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![Sunland Inc. issued $3 million of 10-year, 9% convertible bonds on June 1, 2023, at 98 plus accrued interest. The bonds were dated
April 1, 2023, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Bonds without conversion
privileges would have sold at 97 plus accrued interest.
On April 1, 2024, $0.75 million of these bonds were converted into 15,000 common shares. Accrued interest was paid in cash at the
time of conversion. Assume that the company follows IFRS.
Prepare the entry to record the interest expense at October 1, 2023, by pro-rating the number of months. Start by calculating the
effective rate on the bonds using (1) a financial calculator or (2) Excel functions. Assume that interest payable was credited when
the bonds were issued. (Credit account titles are automatically indented when the amount is entered. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts. Do not indent manually. Round effective interest rate to 4 decimal places, e.g.
3.5275% and final answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.)
Date
Account Titles and Explanation
October
Interest Payable
1, 2023
Interest Expense
Bonds Payable
Cash
Debit
45000
Credit
135000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6ccdcf79-78d2-4137-a0b2-392ece22d1a5%2F3ad98299-ecb5-4a45-bc44-62401ea32f3f%2Fikktly_processed.png&w=3840&q=75)
Transcribed Image Text:Sunland Inc. issued $3 million of 10-year, 9% convertible bonds on June 1, 2023, at 98 plus accrued interest. The bonds were dated
April 1, 2023, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Bonds without conversion
privileges would have sold at 97 plus accrued interest.
On April 1, 2024, $0.75 million of these bonds were converted into 15,000 common shares. Accrued interest was paid in cash at the
time of conversion. Assume that the company follows IFRS.
Prepare the entry to record the interest expense at October 1, 2023, by pro-rating the number of months. Start by calculating the
effective rate on the bonds using (1) a financial calculator or (2) Excel functions. Assume that interest payable was credited when
the bonds were issued. (Credit account titles are automatically indented when the amount is entered. If no entry is required, select "No
Entry" for the account titles and enter O for the amounts. Do not indent manually. Round effective interest rate to 4 decimal places, e.g.
3.5275% and final answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.)
Date
Account Titles and Explanation
October
Interest Payable
1, 2023
Interest Expense
Bonds Payable
Cash
Debit
45000
Credit
135000
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