申論題

三、On January 1, 2011, Burberry Company issued a convertible bond with a par value of $50,000 in the market for $60,000. The bonds are convertible into 6,000 ordinary shares of $1 per share par value. The bond has a 5-year life and has a stated rate of 10% payable annually. The market interest rate for a similar non-convertible bond is 8%. 

(d) Assume that the bonds matured on December 31, 2015. Burberry alter the terms such that the bonds can be converted into 7,000 shares, instead of 6,000 shares as under the original conversion terms. All bonds are converted and the market price at the date of amendment is $8 per share. Prepare the journal entry to record the induced conversions on December 31, 2013. (6%)