financial instruments journal entries

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Dr Cash with the net proceeds of issue Credit the Liability

As each year goes by, unwind the discounted liability,s o

Dr Finance charges Credit the Liability

Redemption date?

Dr the Liability Credit Cash

Convertible bonds?

Calculate the debt element. The difference between Net proceeds and Debt element is the Equity element.

Dr Cash with the net proceeds of the issue Cr the Liability with the debt element, Cr Equity with the equity element

Unwind the discount and Dr Finance charges Cr the Liability

On redemption / conversion?

Dr the Liability Cr Cash with the repayment of the debt

Dr the Equity heading which was originally credited Cr Share Capital if shares are taken up

Dr Loan