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*On January 1, 2011, Gless Textiles issued $14 mil...

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*On January 1, 2011, Gless Textiles issued $14 million of 9.7%, 10-year convertible bonds at 102. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 50 shares of Gless?s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 100 (that is, 100% of face amount). Century Services purchased 11% of the issue as an investment. 1.Prepare the journal entries for the June 30, 2015, interest payment by both Gless and Century assuming both use the straight-line method. (Please record general journal Issuer and Investor) 2.On July 1, 2016, when Gless?s common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method). (Please record general journal Issuer and Investor) *Federal Semiconductors issued 7% bonds, dated January 1, with a face amount of $853 million on January 1, 2011. The bonds sold for $768,584,518 and mature in 2030 (20 years). For bonds of similar risk and maturity the market yield was 8%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $727 million as determined by their market value in the over-the-counter market. Required: (1)Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2011, balance sheet. (2)Assume the fair value of the bonds on December 31, 2012, had risen to $740 million. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2012, balance sheet,It`s not correct answer....

 

Paper#9278 | Written in 18-Jul-2015

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