Problem 10: On January 1, 20x1, SENECTITUDE OLD AGE Co. issued its 12%, 3-yenr, P2,000,000 convertible bonds at 110. Each P1,000 bond is convertible into 8 shares with par value per share of PI00. Principal is due on December 31, 20x3 but interests are due annually at each year-end. When the bonds were issued, they were selling at a yield to maturity market rate of 10% without the conversion option. On December 31, 20x2, half of the bonds were converted into equity. Conversion costs incurred amounted to P20,000. Requirements: a. Provide the pertinent entries. b. Net increase in equity as a result of the conversion. c. Net increase in "share premium" general account as a result of the convension.

Problem 10: On January 1, 20x1, SENECTITUDE OLD AGE Co. issued its 12%, 3-yenr, P2,000,000 convertible bonds at 110. Each P1,000 bond is convertible into 8 shares with par value per share of PI00. Principal is due on December 31, 20x3 but interests are due annually at each year-end. When the bonds were issued, they were selling at a yield to maturity market rate of 10% without the conversion option. On December 31, 20x2, half of the bonds were converted into equity. Conversion costs incurred amounted to P20,000. Requirements: a. Provide the pertinent entries. b. Net increase in equity as a result of the conversion. c. Net increase in "share premium" general account as a result of the convension.

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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