Business, 07.03.2020 05:02, bakerx8529

Presented below are three independent situations:

(a) Howell Corporation purchased $250,000 of its bonds on June 30, 2018, at 102 and immediately retired them. The carrying value of the bonds on the retirement date was $229,500. The bonds pay semiannual interest and the interest payment due on June 30, 2018, has been made and recorded.

(b) Justice, Inc. purchased $200,000 of its bonds at 97 on June 30, 2018, and immediately retired them. The carrying value of the bonds on the retirement date was $196,500. The bonds pay semiannual interest and the interest payment due on June 30, 2018, has been made and recorded.

(c) Starr Company has $80,000, 10%, 12-year convertible bonds outstanding. These bonds were sold at face value and pay semiannual interest on June 30 and December 31 of each year. The bonds are convertible into 40 shares of Starr $5 par value common stock for each $1,000 par value bond. On December 31, 2018, after the bond interest has been paid, $30,000 par value of bonds were converted. The market value of Starr's common stock was $38 per share on December 31, 2018.

Instructions

For each of the independent situations, prepare the journal entry to record the retirement or conversion of the bonds.

Answers: 2

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Presented below are three independent situations:

(a) Howell Corporation purchased $250,...