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

Journal entry are given below

Step-by-step 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