Problem - On January 1, 2017, Flint Corporation issued $4,060,000 of 10-year, 9% convertible debentures at 104. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be converted into 8 shares of Flint Corporation $101 par value common stock after December 31, 2018.
On January 1, 2019, $406,000 of debentures are converted into common stock, which is then selling at $111. An additional $406,000 of debentures are converted on March 31, 2019. The market price of the common stock is then $117. Accrued interest at March 31 will be paid on the next interest date.
Bond premium is amortized on a straight-line basis.
Make the necessary journal entries for:
(a) December 31, 2018.
(b) March 31, 2019.
(c) January 1, 2019.
(d) June 30, 2019.
Record the conversions using the book value method.