Long-Term Liabilities

Presented below are three independent situations.

1. Longbine Corporation redeemed $130,000 face value, 12% bonds on June 30, 2021, at 102. The carrying value of the bonds at the redemption date was $117,500. The bonds pay annual interest and the interest payment due on June 30, 2021, has been made and recorded.
2. Tastove Inc. redeemed $150,000 face value, 12.5% bonds on June 30, 2020, at 98. The carrying value of the bonds at the redemption date was $151,000. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded
3. Precision Company has $80,000, 8%, 12-year convertible bonds outstanding. These bonds were sold at face value and pay annual interest on December 31 of each year. The bonds are convertible into 30 shares of precision $5 par value common stock for each $1,000 worth of bonds on December 31, 2020, after the bond interest has been paid. $20,00 face value bonds were converted. The market price of Precision common stock was $44 per share on December 31, 2020

Instructions

For each independent situation above, prepare the appropriate journal entry for the redemption or conversion of the bonds

Solution