Answer:
The journal entries for the given economic entries are done below:
Explanation:
(a) December 31, 2015.
Bonds Payable…………………………………….$4,000,000
Premium on Bonds Payable……………………….$80,000
Common Stock………………………………………..$3,200,000
Paid in capital in excess of par value…..…$880,000
(b) January 1, 2016.
Bonds Payable…………………………………………..$400,000
Common Stock………………………………………………$400,000
*To record $400,000 debentures converting to common stock.
Cash…………………........……………………..$352,000
Discount on bonds payable………….$48,000
Bonds Payable………………………………$400,000
*To record selling stock at $110
(c) March 31, 2016.
Bonds Payable…………………………$400,000
Common Stock………….......………………..$400,000
*To record 400,000 debentures converting to Common Stock
Cash…………………………………................…..$368,000
Discount on bonds payable………………$32,000
Bonds Payable……………………………..........…....….$400,000
*To record the sale of common stock at $115
(d) June 30, 2016.
Interest Expense……………..$160,000
Interest Payable……………………$160,000
*To record payment of interest expense on Bonds
Computations-
Interest Expense= $4,000,000X8%X6/12= $160,000
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