Debits and Credits

Entry to record early extinguishment of debt with unamortized premium and a gain

Debit Bonds Payable for amount outstanding, Debit Premium on Bonds Payable for amount of unamortized premium, Credit Cash for amount bought back for, Credit Gain on Early Extinguishment for amount outstanding + amount of unamortized premium - amount bought back bonds for.

Entry to record early extinguishment of debt with unamortized premium and a loss

Debit Bonds Payable for amount outstanding, Debit Premium on Bonds Payable for amount of unamortized premium, Debit Loss on Early Extinguishment for amount bought back for - amount outstanding - amount of unamortized premium, Credit Cash for amount bought back for.

Entry to record issuance of convertible bonds

Debit Cash for issue price of bond (including any premium), Credit Convertible Bonds Payable for face value, Credit Premium on Bonds Payable for amount above face value.

Entry to record when convertible bonds are converted to stocks (bond with premium)

Debit Convertible Bonds Payable for amount converted to stock, Debit Premium on Bonds Payable for amount of unamortized premium (if half of the bonds are converted divide this by 2), Credit Common Stock for amount of bonds converted + premium on bonds converted.

Entry to record converting bonds into common stock with par value

Debit Convertible Bonds Payable for amount converted, Credit Common Stock for number of stock x par value per share, Credit Paid in Capital Excess of Par - Common for amount converted - amount of common stock credited.

Entry to record purchase (not issuance) of a convertible bond investment by a company

• Debit Investment in Convertible bonds for face value of bond x % amount purchased.

• Debit Premium on Investment in Bonds for amount of premium on the original bond x % of amount purchased.

• Credit Cash for total of Debits.

Entry to record interest payment for installment note

Debit Interest expense for current carrying balance x interest rate, Debit Notes Payable for required payment each period - interest expense each period (this is the amount of principal paid off with the payment), Credit Cash for amount of payment required each period.

Interest rate changes for bond (recorded at fair value, gain)

Debit Bonds Payable for amount the face value is above the market value of the bond, Credit Unrealized Holding Gain - Income for the same amount.

Entry for change in fair value due to change in credit worthiness of company (recorded at fair value, gain)

Debit Bonds Payable for amount of change, Credit Unrealized Holding Gain - Equity for the same amount

Entry to record converting bond to common stock with a discount

Debit Convertible Bonds Payable for amount converted, Credit Discount on Bonds Payable for amount converted - carrying value of the bond, Credit Common Stock for number of shares x par value, Credit Paid in Capital Excess of Par - Common for amount converted - discount - amount of common stock credited.