| P16-2 (Entries for Conversion, Amortization, and Interest of Bonds) Volker Inc. issued | ||||||
| $2,500,000 | of convertible | 10 | -year bonds on July 1, 2014. The bonds | |||
| provide for | 12% | interest payable semiannually on January 1 and July 1. The discount | ||||
| in connection with the issue was | $54,000 | , which is being amortized monthly on a | ||||
| straight-line basis. | ||||||
| The bonds are convertible after one year into | 8 | shares of Volker Inc.’s | $100 | |||
| par value common stock for each | $1,000 | of bonds. | ||||
| On August 1, 2015, | $250,000 | of bonds were turned in for conversion into common stock. | ||||
| Interest has been accrued monthly and paid as due. At the time of conversion any accrued interest on bonds being converted is paid in cash. | ||||||
| Note: Due to rounding and significant digits, there may be slight number differences. | ||||||
| Instructions: | ||||||
| Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates: (Round to the nearest dollar.) | ||||||
| (a) August 1, 2015. (Assume the book value method is used.) | ||||||
