AC 302 Chapter 16 Problem 2

AC 302 Chapter 16 Problem 2 
Name				Date		
Instructor				Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P16-2 (Entries for Conversion, Amortization, and Interest of Bonds) Volker Inc. issued 						
$2,500,000 	of convertible		10 	-year bonds on July 1, 2012. The bonds 		
provide for	12%	interest payable semiannually on January 1 and July 1. The discount 				
in connection with the issue was			$54,000 	, which is being amortized monthly on a 		
straight-line basis.						
The bonds are convertible after one year into			8 	shares of Volker Inc.'s		$100 
par value common stock for each			$1,000 	of bonds.		
On August 1, 2013,		$250,000 	of bonds were turned in for conversion into common stock.			
Interest has been accrued monthly and paid as due. At the time of conversion any accrued interest on bonds being converted is paid in cash.						
						
Note: Due to rounding and significant digits, there may be slight number differences.						
Instructions:						
Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates: (Round to the nearest dollar.)						
						
(a) August 1, 2013. (Assume the book value method is used.)						
						
Aug 1, 13	Account Title				Amount	
	Account Title					Amount
	Account Title					Amount
	Account Title					Amount
						
	Enter entry memorandum.					
						
						
	Area for calculations as desired.					
	Area for calculations as desired.					
						
Aug 1, 13	Account Title				Amount	
	Account Title					Amount
	Enter entry memorandum.					
						
						
(b) August 31, 2013.						
						
Aug 31, 13	Account title				Formula	
	Account title					Amount
	Enter entry memorandum.					
						
	Area for calculations as desired.					
						
Aug 31, 13	Account Title				22,500 	
	Account Title					Amount
	Enter entry memorandum.					
						
						
(c) December 31, 2013, including closing entries for end-of-year.						
						
Dec 31, 13	Account Title				Amount	
	Account Title					Amount
	Enter entry memorandum.					
						
Schedule 1 - Monthly Amortization Schedule						
Unamortized discount on bonds payable:						
Amount to be amortized over 120 months					Amount	
Text title					Formula	
Text title					Formula	
Text title					Formula	
Text title					Formula	
Text title					Formula	
Text title					Formula	
						
Schedule 2 Interest Expense Schedule						
Amortization of bond discount charged to bond interest expense in 2013 would be as follows:						
	Text title				Formula	
	Text title				Formula	
	Total				Formula	
						
Interest on Bonds:						
Text title					Formula	
Text title					Formula	
Text title					Formula	
Text title					Formula	
Interest for 2013 would be as follows:						
Text title					Formula	
Text title					Formula	
Total					Formula	
						
Total interest						
Text title					Formula	
Text title					Formula	
Text title					Formula