Problem 5-3 On January 1, 2020, ARLENE Company issued convertible bonds with a face amount of P5,000,000 for P6,000,000. The bonds are convertible into 50,000 shares with P100 par value. The bonds have a 5-year life with 10% stated interest rate payable annually every December 31. The fair value of the convertible bonds without the conversion option is computed at P5,399,300 on January 1, 2020. On December 31, 2022, the convertible bonds were not converted but fully paid for P 5,550,000. On such date, the fair value of the bonds without the conversion privilege is P 5,400,000 and the carrying amount is P5,178,300. Required: Prepare the journal entries to record the following: 1. Issuance of convertible bonds 2. Settlement of bonds payable
Problem 5-3 On January 1, 2020, ARLENE Company issued convertible bonds with a face amount of P5,000,000 for P6,000,000. The bonds are convertible into 50,000 shares with P100 par value. The bonds have a 5-year life with 10% stated interest rate payable annually every December 31. The fair value of the convertible bonds without the conversion option is computed at P5,399,300 on January 1, 2020. On December 31, 2022, the convertible bonds were not converted but fully paid for P 5,550,000. On such date, the fair value of the bonds without the conversion privilege is P 5,400,000 and the carrying amount is P5,178,300. Required: Prepare the journal entries to record the following: 1. Issuance of convertible bonds 2. Settlement of bonds payable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Problem 5-3
On January 1, 2020, ARLENE Company issued convertible bonds with a face amount of
P5,000,000 for P6,000,000. The bonds are convertible into 50,000 shares with P100 par
value. The bonds have a 5-year life with 10% stated interest rate payable annually every
December 31. The fair value of the convertible bonds without the conversion option is
computed at P5,399,300 on January 1, 2020.
me
mm
On December 31, 2022, the convertible bonds were not converted but fully paid for P
5,550,000. On such date, the fair value of the bonds without the conversion privilege is P
5,400,000 and the carrying amount is P5,178,300.
Required: Prepare the journal entries to record the following:
1.
Issuance of convertible bonds
2.
Settlement of bonds payable
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