On January 2,2014,Zamarano,Inc.issued 5,000 10-year,6%,$1,000 bonds for $5,500,000.Interest is paid each December 31.The market rate of interest for non-convertible bonds is 5%.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 $5,253,785,all of the bondholders converted the bonds to stock.Zamarano reports under IFRS.
Required:
1.Compute the present value of the bond issue.
2.Prepare the journal entry to record the issuance of the bonds.
3.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 for $5,500,000.Interest is paid each December 31.The market rate of interest for non-convertible bonds is 5%.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 $5,253,785,all of the bondholders converted the bonds to stock.Zamarano reports under IFRS.
Required:
1.Compute the present value of the bond issue.
2.Prepare the journal entry to record the issuance of the bonds.
3.Record the conversion of the bonds.