Twixt Corp. issued $5,010,000 of convertible bonds on 1 January for $4,800,000 cash. The bond had the following terms: Bonds mature in five years' time. Annual interest, 6%, is paid each 31 December. Bonds are convertible to 501,000 common shares at maturity or can be repaid in cash. This choice is up to Twixt Corp. Current market interest rates are 7%. Required: 1. Assign a value to the liability and the equity portions of the bond. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) 2. Provide the journal entry to record issuance of the bond. (If no entry is required for a transaction/event, select 'No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) 3. Provide a schedule to show interest expense and amortization of the liability over the life of the bond. (Do not
Twixt Corp. issued $5,010,000 of convertible bonds on 1 January for $4,800,000 cash. The bond had the following terms: Bonds mature in five years' time. Annual interest, 6%, is paid each 31 December. Bonds are convertible to 501,000 common shares at maturity or can be repaid in cash. This choice is up to Twixt Corp. Current market interest rates are 7%. Required: 1. Assign a value to the liability and the equity portions of the bond. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) 2. Provide the journal entry to record issuance of the bond. (If no entry is required for a transaction/event, select 'No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) 3. Provide a schedule to show interest expense and amortization of the liability over the life of the bond. (Do not
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Twixt Corp. issued $5,010,000 of convertible bonds on 1 January for $4,800,000 cash. The bond had the
following terms: Bonds mature in five years' time. Annual interest, 6%, is paid each 31 December. Bonds
are convertible to 501,000 common shares at maturity or can be repaid in cash. This choice is up to Twixt
Corp. Current market interest rates are 7%. Required: 1. Assign a value to the liability and the equity
portions of the bond. (Do not round intermediate calculations. Round your final answers to the nearest
whole dollar amount.) 2. Provide the journal entry to record issuance of the bond. (If no entry is required
for a transaction/event, select 'No journal entry required" in the first account field. Do not round
intermediate calculations. Round your final answers to the nearest whole dollar amount.) 3. Provide a
schedule to show interest expense and amortization of the liability over the life of the bond. (Do not
round intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no
cell blank. Be certain to enter "0" wherever required.) 4. This part of the question is not part of your
Connect assignment.
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