Sheffield Inc. issued $15,200,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bondswere dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight-line basis.On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paidin cash at the time of conversion.(a)(b)Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was creditedwhen the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amountrecognized at insurance. (Round to nearest dollar.)(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" forthe account titles and enter O for the amounts. Round answers to O decimal place, e.g. 5,125. List all debit entries before credit entries.)(a)Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to recordamortization of the bond discount and interest payment has been made.No. Account Titles and Explanation(b)Interest PayableInterest ExpenseDiscount on Bonds PayableCashBonds PayableDiscount on Bonds PayableCommon StockPaid-in Capital in Excess of Par - Common StockDebit608,000Credit912,000

To record transactions and maintain track of business activities, the business entities enter the…

Sheffield Inc. issued $15,200,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bonds were dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight- line basis. On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount recognized at insurance. (Round to nearest dollar.) Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal place, e.g. 5,125. List all debit entries before credit entries.)

Sheffield Inc. issued $15,200,000 of 12%, 40-year convertible bonds on November 1, 2025, at 97 plus accrued interest. The bonds were dated July 1, 2025, with interest payable January 1 and July 1. Bond discount (premium) is amortized semiannually on a straight- line basis. On July 1, 2026, one-half of these bonds were converted into 56,000 shares of $1 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) (b) Prepare the entry to record the interest expense at December 31, 2025. Assume that accrued interest payable was credited when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount recognized at insurance. (Round to nearest dollar.) Prepare the entry to record the conversion on July 1, 2026. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal place, e.g. 5,125. List all debit entries before credit entries.)

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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