(Learning Objectives 2, 3, 6: Issue convertible bonds at a discount, amortize using the effective-interest method, and convert bonds; report bonds payable on the
Requirements
1. Use the PV function in Excel to calculate the issue price of the bonds.
2. Prepare an effective-interest method amortization table for the term of the bonds using Excel.
3. Journalize the following transactions:
- a. Issuance of the bonds on December 31, 2018. Credit Convertible Bonds Payable.
- b. Payment of interest and amortization of the bond discount on June 30, 2019.
- c. Payment of interest and amortization of the bond discount on December 31, 2019.
- d. Conversion by the bondholders on July 1, 2020, of bonds with a total face value of $1,600,000 into 80,000 shares of Mainland’s $1-par common stock.
4. Show how Mainland would report the remaining bonds payable on its balance sheet at December 31, 2020.
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