Mae Jong Corp.issued 1,000 convertible bonds at the beginning of 2015.The bonds have a four-year term with a stated rate of interest of 6 percent, and are issued at par with a face value of €1,000 per bond (the total proceeds received from issuance of the bonds are €1,000,000).Interest is payable annually at December 31.Each bond is convertible into 250 ordinary shares with a par value of €1.The market rate of interest on similar non-convertible debt is 9 percent.On December 31, 2012, Mae Jong wishes to reduce its annual interest cost.The company agrees to pay the holder of its convertible bonds an additional €40,000 if they will convert.Assuming conversion occurs, Mae Jong's journal entry to record the conversion will include all of the following except

Question

Quizplus · Accepted Answer

The Answer of Mae Jong Corp.issued 1,000 convertible bonds at the beginning of 2015.The bonds have a four-year term with a stated rate of interest of 6 percent, and are issued at par with a face value of €1,000 per bond (the total proceeds received from issuance of the bonds are €1,000,000).Interest is payable annually at December 31.Each bond is convertible into 250 ordinary shares with a par value of €1.The market rate of interest on similar non-convertible debt is 9 percent.On December 31, 2012, Mae Jong wishes to reduce its annual interest cost.The company agrees to pay the holder of its convertible bonds an additional €40,000 if they will convert.Assuming conversion occurs, Mae Jong's journal entry to record the conversion will include all of the following except