Prepare journal entries to record each of the following transactions for Gordon's Biking Supplies (GBS) on January 1, Year 1.
a. GBS issues $100,000 of convertible bonds at 98% of par.Without the conversion feature, the bonds would have traded at 88% of par.The bonds each have a $1,000 face value and an 8% stated rate.Each bond can be converted into 50 shares of stock with a $5 par value.The bonds have a 10-year maturity and the straight line method of discount amortization is used.Interest is paid annually on January 1.
b. Prepare any entry necessary on December 31, Year 1.
c. Prepare any entry necessary on December 31, Year 2.
d. On January 1, Year 3, $25,000 par value of bonds are converted when the market price per share $25.(Hint: do not record a gain or loss on conversion.)

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The Answer of Prepare journal entries to record each of the following transactions for Gordon's Biking Supplies (GBS) on January 1, Year 1.
a. GBS issues $100,000 of convertible bonds at 98% of par.Without the conversion feature, the bonds would have traded at 88% of par.The bonds each have a $1,000 face value and an 8% stated rate.Each bond can be converted into 50 shares of stock with a $5 par value.The bonds have a 10-year maturity and the straight line method of discount amortization is used.Interest is paid annually on January 1.
b. Prepare any entry necessary on December 31, Year 1.
c. Prepare any entry necessary on December 31, Year 2.
d. On January 1, Year 3, $25,000 par value of bonds are converted when the market price per share $25.(Hint: do not record a gain or loss on conversion.)

Prepare Journal Entries to Record Each of the Following Transactions