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On January 1, 2015, Cai Company issued a 10% convertible bond at par, with a...

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On January 1, 2015, Cai Company issued a 10% convertible bond at par, with a face value of yen 100,000, maturing on January 1, 2025. The bond is convertible into ordinary shares of Cai at a conversion price of yen 2, 500 per share. Interest is payable annually. At date of issue, Cai could have issued at par non-convertible debt with a 10-year term bearing an interest rate of 11%. (a) Prepare the journal entry to record the issuance of the convertible debt on January 1, 2015 b) On January 1, 2018, Cai makes a tender of the convertible debt to repurchase the bond for yen 112,000, which the holder accepts. At the date of repurchase, Cai could have issued non-convertible debt with a 7-year term at an effective interest rate of 8%. Prepare the journal entry to record this repurchase on January 1, 2018

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