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Homework answers / question archive / 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

Finance

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.

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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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