On January 2,2014,Zamarano,Inc.issued 5,000 10-year,6%,$1,000 bonds at par.Interest is paid each December 31.Each bond is convertible into 25 shares of Zamarano $2 Par Value common stock after two years.The market value of the stock on the date of the issue was $45.On January 2,2018,when the carrying value of the bonds was $4,570,363,all of the bondholders converted the bonds to stock.Zamarano reports under GAAP.
Required:
1.Prepare the journal entry to record the issuance of the bonds.
2.Recompute the interest rate of the bond issue.
3.Record the first interest payment.
4.Record the conversion of the bonds.

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The Answer of On January 2,2014,Zamarano,Inc.issued 5,000 10-year,6%,$1,000 bonds at par.Interest is paid each December 31.Each bond is convertible into 25 shares of Zamarano $2 Par Value common stock after two years.The market value of the stock on the date of the issue was $45.On January 2,2018,when the carrying value of the bonds was $4,570,363,all of the bondholders converted the bonds to stock.Zamarano reports under GAAP.
Required:
1.Prepare the journal entry to record the issuance of the bonds.
2.Recompute the interest rate of the bond issue.
3.Record the first interest payment.
4.Record the conversion of the bonds.