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%. 

(c) Assume that Burberry repurchases the convertible bonds on December 31, 2013 for a cash $55,000. The fair value of the liability component of the bonds is determined to be $54,000. Prepare the journal entry to record the repurchase on December 31, 2013. Assume that the accrual of interest related to 2013 has been recorded. (5%)