Question

Sigel Corporation retired $130,000 face value, 12% bonds on June 30, 2010, at 102?

Sigel Corporation retired $130,000 face value, 12% bonds on June 30, 2010, at 102. The carrying value of the bonds at the redemption date was $117,500. The bonds pay semiannual interest, and the interest payment due on June 30, 2010, has been made and recorded.

Diaz Inc. retired $150,000 face value, 12.5% bonds on June 30, 2010, at 98. The carrying value of the bonds at the redemption date was $151,000. The bonds pay semiannual interest, and the interest payment due on June 30, 2010, has been made and recorded.

Haas Company has $80,000, 8%, 12-year convertible bonds outstanding. These bonds were sold at face value and pay semiannual interest on June 30 and December 31 of each year. The bonds are convertible into 30 shares of Haas $5 par value common stock for each $1,000 worth of bonds. On December 31, 2010, after the bond interest has been paid, $20,000 face value bonds were converted. The market value of Haas common stock was $44 per share on December 31, 2010.

3 years ago - 1 answers

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1. June 30, 2010
Debit: Bonds payable $130,000
Debit: Loss on bonds redemption $15,100
Credit: Cash $132,600
Credit: Bonds discount $12,500

2. June 30, 2010
Debit: Bonds payable $150,000
Debit: Bonds premium $1,000
Credit: Cash $147,000
Credit: Gain on bonds redemption $4,000

3. Dec 31, 2010
Debit: Bonds payable $20,000
Credit: Paid-in capital in excess of par par value $17,000
Credit: Common stock $3,000 (600 shares @ par of $5)

3 years ago