On January 1, 2017, Waterway Corporation issued $3,680,000 of10-year, 8% convertible debentures at 102. Interest is to be paidsemiannually on June 30 and December 31. Each $1,000 debenture canbe converted into 8 shares of Waterway Corporation $100 par valuecommon stock after December 31, 2018.
On January 1, 2019, $368,000 of debentures are converted intocommon stock, which is then selling at $110. An additional $368,000of debentures are converted on March 31, 2019. The market price ofthe common stock is then $116. Accrued interest at March 31 will bepaid on the next interest date.
Bond premium is amortized on a straight-line basis.
Make the necessary journal entries for:
| (a) | | December 31, 2018. | | (c) | | March 31, 2019. |
| (b) | | January 1, 2019. | | (d) | | June 30, 2019. |
record conversions using the book value method.
