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School: Seneca College - Course: IAF 640 - Subject: Accounting

Cullumber Corp. offers 3 year6% convertible bonds par$1,000 Each Similar straight bonds carry an interest rate of9%1000 bonds are issued at pa The bond discount will be partially amortizaed at this point. The contributed surplus - conversion rights am which is the fair value of the instrument at the time of early retirement. The fair value of the bond (excludin Prepare the journal entry to record the retirement of the convertible debt Bonds payable$973,000 Loss on redemption of bonds$11,200 Contributed surplus - Conversion rights$75,939 Retained earnings$10,261 Cash$1,070,400

1000 bond may be converted into225 common shares, which are currently trading at ar. Assume that holders of the convertible debt of Crane corp decide to convert their convertible bonds befor mount to be$75,939 Cullumber Corp decides to retire the convertibel debt early and offers the bo ng the conversion feature) is$984,200 and the carrying value is$973,000 Assume AS

$3 per share re the binds mature ond holders $1,070,400 cash SPE is followed