Presented below are three independent situations.
- 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.
- 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
- 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
Journal entries for the redemption or conversion of the bonds,
