On January 1 2024 a public company, John Cruz corporation (jcc) issued $1,000,000 of 8%, five year, convertible debentures. Intrest paid semi-annually on June 30th and December 31st. The debentures are convertible at the investors option. The conversion ratio is 20 common shares for each $1,000 bond. Market interest rates for non-convertible bonds is similar risk and term are 7%. The net proceeds received by ccc were 1,200,000. CCC uses gross method to account for bonds. Prepare journal entry to recird bond issuance on Jan 1 2024 Prepare june 30 2024 entry to record interest expense assuming that ccc amortizes bond premium and discount using the method of ifrs

On January 1 2024 a public company, John Cruz corporation (jcc) issued $1,000,000 of 8%, five year, convertible debentures. Intrest paid semi-annually on June 30th and December 31st. The debentures are convertible at the investors option. The conversion ratio is 20 common shares for each $1,000 bond. Market interest rates for non-convertible bonds is similar risk and term are 7%. The net proceeds received by ccc were 1,200,000. CCC uses gross method to account for bonds. Prepare journal entry to recird bond issuance on Jan 1 2024 Prepare june 30 2024 entry to record interest expense assuming that ccc amortizes bond premium and discount using the method of ifrs

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 21E: On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be...

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On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
Sunland Inc. issued $3 million of 10-year, 9% convertible bonds on June 1, 2023, at 98 plus accrued interest. The bonds were dated April 1, 2023, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Bonds without conversion privileges would have sold at 97 plus accrued interest. On April 1, 2024, $0.75 million of these bonds were converted into 15,000 common shares. Accrued interest was paid in cash at the time of conversion. Assume that the company follows IFRS. (a) Your answer is partially correct. Prepare the entry to record the issuance of the convertible bonds on June 1, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.) Date Account Titles and Explanation June 1, 2023 Cash Bonds Payable Interest Payable…
On 1 July 2022, SFU Co issued a convertible bond at par value of $20 million and has recordedit as a non-current liability. The bond is redeemable for cash on 30 June 2024 at par. Bondholderscan however, opt for the conversion in the form of a fixed number of shares. Interest on the bondis payable at a rate of 4% a year in arrears. The interest paid in the year has been presented asfinance cost. The interest rate on similar debt without a conversion option is 10%, with a presentvalue of $17,91 million at 1 July 2022. Discuss how the convertible bonds should be accounted for during the 2023 financialperiod. Please also show the calculations for my understanding
On July 1, 2023, Pharoah Ltd., which follows ASPE, issued 1,000 convertible, five-year, $1,000 bonds. Each bond is convertible into 20 common shares at the bondholder's option. On the date of issuance, the bond's conversion rights were valued at $51,000. On July 1, 2026, the bonds had a carrying value on Pharoah's books of $969,000, and the fair market value of the bonds without the convertible option was $973,000. (a) Assume all the bondholders voluntarily decided to convert their bonds to common shares on July 1, 2026. Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Bonds Payable Common Shares Contributed Surplus - Conversion Rights Debit Credit
Florence Inc. issued 8,000, 5-year convertible bonds of $2,000 each for $4,000,000 at the beginning of 2021. The bonds have a stated rate of interest of 9% and interest is payable annually. Each bond can be convertible into 100 shares with a par value of $10. The market rate of similar nonconvertible debt is 10%. Determine the fair value of the equity component using the “with-and-without” method is a. $3,848,288 b. $2,483,600 c. $1,365,688 d. $151,712
On July 1, 2023, Sandhill Ltd., which follows ASPE, issued 1,000 convertible, five-year, $1,000 bonds. Each bond is convertible into 20 common shares at the bondholder's option. On the date of issuance, the bond's conversion rights were valued at $50,000. On July 1, 2026, the bonds had a carrying value on Sandhill's books of $971,000, and the fair market value of the bonds without the convertible option was $975,000. (a) Assume all the bondholders voluntarily decided to convert their bonds to common shares on July 1, 2026. Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit
Sheridan Corporation issued $5 million of 10-year, 6% callable convertible subordinated debentures on January 2, 2023. The debentures have a face value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in two years it will increase to 17:1. At the date of issue, the bonds were sold at 100 to yield a 6% effective interest rate. The bond discount is amortized using the effective interest method. Sheridan's effective tax rate was 30%. Net income in 2023 was $7.4 million, and the company had 3 million shares outstanding during the entire year. For simplicity, ignore the requirement to record the debentures' debt and equity components separately. (a) Calculate basic earnings per share. (Round answers to 2 decimal places, e.g. 15.25.) Basic earnings per share $
Computalog Inc. showed the following on its December 31, 2023, balance sheet: Bonds payable, convertible $4,020,000 Less: Unamortized discount 14,472 $4, 005, 528 Required: 1. Assuming the bonds are convertible into 402,000 common shares, journalize the conversion on January 1, 2024, when the market value per common share was $10.25.
Stinson Corporation issued $600,000 of 7%, 10-year bonds payable on March 31, 2022. The market interest rate at the date of issuance was 9%, and the bonds pay interest semiannualy. St Corporation's year-end is March 31. Read the requirements. 1. Using the PV function in Excel, The issue price of the bonds is Requirements 1. Using the PV function in Excel, calculate the issue price of the bonds 2. Prepare an effective-interest amortization table for the bonds through the first three interest payments. Round amounts to the nearest dollar 3. Record Stinson Corporation's issuance of the bonds on March 31, 2022, and payment of the first semiannual interest amount and amortization of the bond discount on September 30, 2022 Explanations are not required Print Done X Clear all Check answer
1. On January 1, 2025, Ariana Corporation issued its 8%, 5-year convertible debt instrument with a face amount of P8,000,000 for P7,700,000. Interest is payable every December 31 each year. The debt instrument is convertible into 50,000 ordinary shares with a par value of P100. When the debt instrument were issued, the bonds without the conversion option were sold for P7,393,312 yielding 10%. On December 31, 2027, P6,400,000 of the convertible debt instrument were converted. How much is the gain or loss on conversion taken to profit or loss for the year 2027? With solution po :)) Thank you, dear tutor/s!❤️