On January 1,2014,ABC Incorporated issued $10,000,000 face amount of 8%,10 year,subordinated convertible debentures at face value in a private placement.The debentures pay interest annually,in cash,on 31 December.The bonds are convertible into 50 common shares for each $1,000 of the bonds' face value.
Part A: Prepare Journal entries to record the issuance of the bonds on January 1,2014.Assume that the principal will not be repaid.Instead,shares will be issued to the holders of the debentures in addition to the cash interest paid.In other words,conversion is deemed to be mandatory.
Part B: Prepare Journal entry to record the interest payment on the first interest date of 31 December 2014.Also record the related equity transfer.

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The Answer of On January 1,2014,ABC Incorporated issued $10,000,000 face amount of 8%,10 year,subordinated convertible debentures at face value in a private placement.The debentures pay interest annually,in cash,on 31 December.The bonds are convertible into 50 common shares for each $1,000 of the bonds' face value.
Part A: Prepare Journal entries to record the issuance of the bonds on January 1,2014.Assume that the principal will not be repaid.Instead,shares will be issued to the holders of the debentures in addition to the cash interest paid.In other words,conversion is deemed to be mandatory.
Part B: Prepare Journal entry to record the interest payment on the first interest date of 31 December 2014.Also record the related equity transfer.

On January 1,2014,ABC Incorporated Issued $10,000,000 Face Amount of 8%,10