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On March 1, 2018, the Miner Company received authorization to issue $160,000 in debentures
On March 1, 2018, the Miner Company received authorization to issue $160,000 in debentures.
The bonds have a stated interest rate of 6%, and they mature in ten years. Interest is payable each February 28th and August 31st. On October 31, 2021, Miner issued 90 of the bonds and received cash from the lender in the total amount of $98,500.
Then, on May 1, 2025, the bondholders converted the bonds into 8,800 shares of Miner's $10 par common stock.
Miner paid all interest due on May 1st in cash. Miner has a fiscal year-end that ends each June 30th. Prepare ONLY those journal entries that the company would make relating to the bonds on MARCH 1, 2018, OCTOBER 31, 2021, FEBRUARY 28, 2022, and MAY 1, 2025.
Expert Solution
Journal Entries:
| Date | Account Titles and Explanation | Debit | Credit |
| 01.03.2018 | No entry | ||
| 31.10.2021 |
Cash 6% Debentures Account (90*$1,000) Securities Premium Account (Being issue of Debentures for Cash ) |
98,500 |
90,000 8,500 |
| 28.02.2022 |
Interest on debentures ($90,000*6%*4/12) Bank Account ( Being Interest due on debentures paid for the period) |
1800 |
1800 |
| 01.05.2025 |
Interest on Debenture ($90,000*6%*2/12) Bank ( Being interest on debentures due for the period of two months paid) |
900 |
900 |
| 01.05.2020 |
6% Debentures Account Equity Share Capital Account Securities Premium Account (Being 6% Debentures converted to 8,800 equity shares) |
90,000 |
88,000 2,000 |
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