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P6. Bond basics-straight line method, retirement, and conversion
Golden Corporation has $20,000,000 of 10.5 percent, 20-years bonds dated June 1, 2010, with interest payment dates of may 31 and november 30. After ten years the bonds are callable at 104, and each $1,000 bond is convertible into 25 shares of $20 par value common stock. The company's fiscal year ends on December 31. It uses the straight-line method to amortize bond premiums or discounts.
1. Assume the bonds are issued at 103 on june 1, 2010.