Prepare the journal entry to record the issuance of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Prepare the journal entry to record the issuance of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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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Question

Blossom Corporation sold 160 convertible, 10-year bonds at par for $160,000. Each bond pays 3% annual interest and each bond
can be converted to ten common shares at the bondholder's request. When the bonds were issued common shares were trading for
$14 per share. The market rate of interest for similar bonds without conversion rights was 5%.
Prepare the journal entry to record the issuance of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124
and the final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not
indent manually.)
Account Titles and Explanation
Cash
Contributed Surplus - Stock Options
Bonds Payable
Debit
Credit
160,000

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