Chesapeake Inc.issued a 7-year bond on October 1,2018.The $735,000 par bond pays $51,450 of interest on October 1st each year,its year-end.
It is now February 2022.During the audit of the 2021 financial statements,it was discovered that the bond indenture allowed holders to convert the bonds to common shares.The terms of the conversion allow each $1,000 bond to be converted into 50 shares.Additional investigation concluded that the bond would have yielded 8%/annum had it not included the conversion option.
Required:
Record any adjusting journal entries required to correct Chesapeake's accounts.The books for 2021 have not yet been closed.

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The Answer of Chesapeake Inc.issued a 7-year bond on October 1,2018.The $735,000 par bond pays $51,450 of interest on October 1st each year,its year-end.
It is now February 2022.During the audit of the 2021 financial statements,it was discovered that the bond indenture allowed holders to convert the bonds to common shares.The terms of the conversion allow each $1,000 bond to be converted into 50 shares.Additional investigation concluded that the bond would have yielded 8%/annum had it not included the conversion option.
Required:
Record any adjusting journal entries required to correct Chesapeake's accounts.The books for 2021 have not yet been closed.