Question

Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2020, when the unamortized discount is $30,000 and the market price of the stock is $21 per share.

Answer 1

Answer:

Journal entry are given below

Explanation:

we get first bonds payable and common stock that is

For bonds payable            

bonds payable = 2,000 × $1,000

bonds payable = $2,000,000

For common stock

common stock = 2,000 × 50 × $10

common stock = $1,000,000

For paid in capital

paid in capital = $2,000,000 - ($1,000,000 - $30,000)

paid in capital = $970,000

so Journal entry are as

Date     Title                          Debit                credit

            Bond payable          $2000000

            discount on bond                              $30000

             common stock                                  $1000000

              paid in capital                                   $970000