An example of a mandatory corporate action for a PIK bond that pays in both cash and bond follows. That is, you specify both a cash rate and a baby bond rate.

Add Mandatory PIK Bond Announcement paying part in Cash and part in Bond:

Account PIKDEMO owns 1,000,000.00 of ITSA Limited.
On 20031220, ITSA Limited pays in kind a Coupon based on an 8% Coupon Rate,
And pays in Cash based upon 4%.

Create Payment in Kind Bond panel - Pay in Cash and Bond

You enter the Baby Bond Price on the Corporate Action Announcement panel in the case of a Mandatory action, or on the Entity Election panel in the case of a Voluntary action. See the previous figure.

In this scenario, Eagle Accounting creates Cash Receivable of 20,000.00, payable on 20031220. Eagle Accounting creates an Open Lot with the following attributes:

Trade Date: 20031215

Settle Date: 20031220

Par: 40,000.00

Price: 99

Cost: 39,600.00

General Ledger Entries

General Ledger Entries created on 20031215 appear in the following table.

General Ledger Entries for Mandatory PIK Bond Paid in Cash/Bond

General Ledger Entries for Mandatory PIK Bond Paid in Cash/Bond
Trade Date	Accounting Date	Post Date	Ledger Account	Ledger Account Description	dr amt	cr amt	Net dr cr amt
Dec 15 2003	Dec 15 2003	May 21 2004	1007000500	Investments Interest Receivable	0.00	40,000.00	(40,000.00)
Dec 15 2003	Dec 15 2003	May 21 2004	1010000100	Cost of Investments	39,600.00	0.00	39,600.00
Dec 15 2003	Dec 15 2003	May 21 2004	4001000100	Investment Interest Income	400.00	0.00	400.00
Dec 15 2003	Dec 15 2003	May 21 2004	1007000500	Investments Interest Receivable	1,666.67	0.00	1,666.67
Dec 15 2003	Dec 15 2003	May 21 2004	1010000100	Cost of Investments	0.00	142.45	(142.45)
Dec 15 2003	Dec 15 2003	May 21 2004	4001000100	Investment Interest Income	0.00	1,666.67	(1,666.67)
Dec 15 2003	Dec 15 2003	May 21 2004	4001000401	Amortization of Premium	142.45	0.00	142.45
					1,809.12	1,809.12	(0.00)

Accounting V17

Mandatory PIK Bond Example Paying in Cash/Bond

General Ledger Entries