View the step-by-step solution to:

(Conversion of Bonds) On January 1, 2010, when its $45 par value common stock was selling for $119 per share, Bartz Corp. issued $14,900,000 of 8%...

(Conversion of Bonds)
On January 1, 2010, when its $45 par value common stock was selling for $119 per share, Bartz Corp. issued $14,900,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,490 bond to convert the bond into five shares of the corporation's common stock. The debentures were issued for $15,794,000. The present value of the bond payments at the time of issuance was $12,665,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2011, the corporation's $45 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2012, when the corporation's $22 par value common stock was selling for $201 per share, holders of 20% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
(Conversion of Bonds)   On January 1, 2010, when its $45 par value common stock was selling for $119 per share, Bartz Corp. issued $14,900,000 of  8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,490 bond to convert the  bond into five shares of the corporation's common stock. The debentures were issued for $15,794,000. The present value of  the bond payments at the time of issuance was $12,665,000, and the corporation believes the difference between the  present value and the amount paid is attributable to the conversion feature. On January 1, 2011, the corporation's $45 par  value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2012,  when the corporation's $22 par value common stock was selling for $201 per share, holders of 20% of the convertible  debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond  discounts or premiums.  (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)   (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures.   Description/Account                 (b) Complete the two schedules below and prepare in general journal form the entry to record the exercise of the conversion optio     Premium on bonds payable on January 1, 2010   Premium on bonds payable on January 1, 2012           Number of shares convertible on January 1, 2010:                   Number of shares convertible after the stock split       Par Value per share   Total Par Value     Recording the conversion:   Description/Account Debit          
Background image of page 1
Background image of page 2
Sign up to view the entire interaction

Top Answer

Dear Student Please find... View the full answer


General Journal form the entry to record the original issuance of the convertible debentures
Premium on Bonds payable
Bonds Payable 15,794,000
14,900,000 Computation of Unamortized...

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.


Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online