Closed Tech Ltd. issued convertible bonds on 1 July 20X8. The 15-year, 5% $13,000,000 bonds...
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Closed Tech Ltd. issued convertible bonds on 1 July 20X8. The 15-year, 5% $13,000,000 bonds pay interest semi-annually each 30 June and 31 December. At the investors option, each $1,000 bond is convertible into 50 common shares on the bonds maturity date. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Bond market analysts indicated that if the bonds had not been convertible, they would likely have sold to yield 6%, and have raised $11,726,000. They were, in fact, issued for $13,500,000.
Required: 1. Provide the journal entry to record the initial issuance of the bond. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 3 decimal places.)
2. Provide the entry to record interest at 31 December 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 3 decimal places.)
- Record the interest expense on bond
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