GEN - JOURNAL ENTRIES

Question 1

What is the journal entry to book a sale of bonds?

Answer 1

Dr CASH
Dr DISCOUNT (IF ANY)

Cr BONDS PAYABLE (FACE VALUE)
Cr PREMIUM (IF ANY)

Question 2

What is the journal entry to convert bonds to stock using the book value method?

Answer 2

1. Take the the bonds and related discount/premiums off the books
2. record the stock at par value
3. plug any difference to APIC

Dr BONDS PAYABLE (FACE VALUE)
Dr PREMIUM (IF ANY)

Cr DISCOUNT (IF ANY)
Cr COMMON STOCK (FACE VALUE)
Cr APIC (for any difference)