P16-2 (Entries for Conversion, Amortization, and
Interest of Bonds) Volker Inc. Issued $2,500,000 of convertible 10
-year bonds on July 1, 2014. The bonds provide for 12% interest payable semiannually
on January 1 and July 1. The discount in connection with the issue was $54,000,
which is being amortized monthly on a straight-line basis.
The bonds
are convertible after one year into 8 shares of Volker Inc.'s $100 par value
common stock for each $1,000 of bonds.
On August
1, 2015, $250,000 of bonds were turned in for conversion into common stock.
Interest
has been accrued monthly and paid as due. At the time of conversion any accrued
interest on bonds being converted is paid in cash.
Note: Due to
rounding and significant digits, there may be slight number differences.
Instructions
Prepare
the journal entries to record the conversion, amortization, and interest in
connection with the bonds as of the following dates: (Round to the nearest
dollar.)
(a) August
1, 2015. (Assume the book value method is used.)
(b) August
31, 2015.
(c) December
31, 2015, including closing entries for end-of-year.
TUTORIAL
PREVIEW
|
Aug 1, 15
|
Bonds Payable
|
250,000
|
|
|
Discount on Bonds Payable (Schedule 1)
|
|
4,815
|
|
|
Common Stock (8 shares × 250 bonds × $100par)
|
|
200,000
|
File name: P16-2 Volker Inc.xls File type: xls PRICE: $10
