Prepare the journal entries necessary to record the following transactions for the Falcon Company:
a. On January 1, Year 1, the company issued 10,000 shares of common stock (par value $5) at $15 per share.
b. On January 1, Year 2, the company issued $200,000 of convertible bonds at par. The bonds have a face value of $1,000, pay 8% annually and are convertible into 40 shares of common shares. Without the conversion feature, the bonds would have been issued at 98.
c. On June 1, Year 2, the company repurchased 8,000 of the common shares when the market price per share was $25.
d. On January 1, Year 3, the convertible bonds were exchanged for treasury shares. The market price of common stock on that date is $30. (Hint: recognize a gain or loss on conversion.)

Question

Prepare the journal entries necessary to record the following transactions for the Falcon Company:
 a.	On January 1, Year 1, the company issued 10,000 shares of common stock (par value $5) at $15 per share.
b.	On January 1, Year 2, the company issued $200,000 of convertible bonds at par. The bonds have a face value of $1,000, pay 8% annually and are convertible into 40 shares of common shares. Without the conversion feature, the bonds would have been issued at 98.
c.	On June 1, Year 2, the company repurchased 8,000 of the common shares when the market price per share was $25.
d.	On January 1, Year 3, the convertible bonds were exchanged for treasury shares. The market price of common stock on that date is $30. (Hint: recognize a gain or loss on conversion.)

Quizplus · Accepted Answer

The Answer of Prepare the journal entries necessary to record the following transactions for the Falcon Company:
 a.	On January 1, Year 1, the company issued 10,000 shares of common stock (par value $5) at $15 per share.
b.	On January 1, Year 2, the company issued $200,000 of convertible bonds at par. The bonds have a face value of $1,000, pay 8% annually and are convertible into 40 shares of common shares. Without the conversion feature, the bonds would have been issued at 98.
c.	On June 1, Year 2, the company repurchased 8,000 of the common shares when the market price per share was $25.
d.	On January 1, Year 3, the convertible bonds were exchanged for treasury shares. The market price of common stock on that date is $30. (Hint: recognize a gain or loss on conversion.)

Prepare the Journal Entries Necessary to Record the Following Transactions