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# 10. On 1/2/YR1 XYZ issued 500, \$1,000 face value bonds with a coupon rate of 5%,...

## Question

###### 10. On 1/2/YR1 XYZ issued 500, \$1,000 face value bonds with a coupon rate of 5%,...

10. On 1/2/YR1 XYZ issued 500, \$1,000 face value bonds with a coupon rate of 5%, pay interest semiannually, mature in ten years, and are convertible into 50 shares of its common stock. The bonds were issued for \$1,100 each. The company will amortize any premium or discount using the straight-line method. The company's common equity was trading for \$15/ share on 1/2/YR1. On 6/30/YR2, immediately after the third interest payment, 1 of the bonds were converted. The stock was trading for \$30 on this day. Prepare the journal entry to record: a) The bond issue: b) The third interest payment. c) The conversion of of the bonds.

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