Access the Microsoft website: www.microsoft.com. Select \"Investor Relations\" a
ID: 2462610 • Letter: A
Question
Access the Microsoft website: www.microsoft.com. Select "Investor Relations" and then "Sec Filings." Acces the 10-K for the year ended June 30, 2012. (The debt was converted in June 2013). Find disclosure notes related to the zero-coupon convertible notes. Prepare the journal entry that was recorded when the notes were issued in 2010. Use the information in the financial statment note accessed . The actual present value of the debt was $1,183,115 (PV of $1,250,000 discounted for 3 years at 1.85%). Consider the conversion component and the debt issue costs for the entry.
Explanation / Answer
Amount in millions
Debit Cash (proceeds given in Note 12) $1240
Debit Debt issue costs (to balance) $1
Debit Discount on notes ($1,250 – 1,183) $67
Credit Notes payable (given in Note 12) $1250
Credit Equity—conversion option (given in Note 12) $58