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can u plz tell me journal entries for the following:
deep discount bond- year issued(1st year) and redemption year
convertibles- year issued(1st year) and redemption year (for both conversion and non conversion)
Are you sure that this is not somewhere in the study text or even in the OT notes?
Page 581 / 582 of Kaplan study text!
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
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