Tetros bros producing oxygen valves and it was leading in market share for its oxygen new gen kit which was used in hospitals. Recently for expansion it issued P2,500,000 of convertible 10-year bonds on July 1, 2018. The bonds provide for 12% interest payable semiannually on Jan 1 and July 1. The discount in connection with the issue was P54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of P100 par value common stock for each P1000 of bonds. On August 1, 2019, P250,000 of bonds were turned in for conversion into common stock. Interest has been accrued and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. A. August 1, 2019 (assume book value method is used) B. August 31, 2019 C. December 31, 2019, including closing entries for end-of-year Other details: 1. Unamortized discount on bonds payable and it starts with Amount to be amortized over 120 months 2. Amortization of bond discount charged to bond interest expense in 2019 would be as follows Interest on Bonds: Interest for 2019 would be as follows: Total interest
Tetros bros producing oxygen valves and it was leading in market share for its oxygen new gen kit which was used in hospitals. Recently for expansion it issued P2,500,000 of convertible 10-year bonds on July 1, 2018. The bonds provide for 12% interest payable semiannually on Jan 1 and July 1. The discount in connection with the issue was P54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of P100 par value common stock for each P1000 of bonds. On August 1, 2019, P250,000 of bonds were turned in for conversion into common stock. Interest has been accrued and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. A. August 1, 2019 (assume book value method is used) B. August 31, 2019 C. December 31, 2019, including closing entries for end-of-year Other details: 1. Unamortized discount on bonds payable and it starts with Amount to be amortized over 120 months 2. Amortization of bond discount charged to bond interest expense in 2019 would be as follows Interest on Bonds: Interest for 2019 would be as follows: Total interest
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Tetros bros producing oxygen valves and it was leading in market share for its oxygen new gen kit which was used
in hospitals. Recently for expansion it issued P2,500,000 of convertible 10-year bonds on July 1, 2018. The bonds
provide for 12% interest payable semiannually on Jan 1 and July 1. The discount in connection with the issue was
P54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8
shares of P100 par value common stock for each P1000 of bonds.
On August 1, 2019, P250,000 of bonds were turned in for conversion into common stock. Interest has been
accrued and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash.
Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of
the following dates.
A. August 1, 2019 (assume book value method is used)
B. August 31, 2019
C. December 31, 2019, including closing entries for end-of-year
Other details:
1. Unamortized discount on bonds payable and it starts with Amount to be amortized over 120 months
2. Amortization of bond discount charged to bond interest expense in 2019 would be as follows
Interest on Bonds:
Interest for 2019 would be as follows:
Total interest
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