On January 1 of Year 1, Friday Corporation issued $1,000,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. Record the entry for issuance of the bonds. b. Record the entry for the subsequent exercise of the 20,000 stock purchase warrants on January 2 of Year 1.

On January 1 of Year 1, Friday Corporation issued $1,000,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. Record the entry for issuance of the bonds. b. Record the entry for the subsequent exercise of the 20,000 stock purchase warrants on January 2 of Year 1.

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 December 1, 2021, Bramble Corp.issued 680 of its 8%, $1,000 bonds at 104. Attached to each bond was one detachable stock warrant entitling the holder to purchase 1 share of Bramble's common stock. On December 1, 2021, the market value of the bonds, without the stock warrants, was 97, and the market value of each stock purchase warrant was $50. The amount of the proceeds from the issuance that should be accounted for as the initial carrying value of the bonds payable would be $700,400 O $680,000 $672,533 $665,380
On April 1, 2021, Austere Corporation issued $320,000 of 14% bonds at 108. Each $1000 bond was sold with 20 detachable stock warrants, each permitting the investor to purchase one share of common stock for $15. On that date, the market value of the common stock was $13 per share and the market value of each warrant was $2. Austere should record what amount of the proceeds from the bond issue as an increase in liabilities? $332,800. $0. $257,300. $458,100.
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wy Company issued $500,000, 8% bonds on January 1, Year 1. The bonds pay interest on June 30 and December 31 and mature on December 31, Year 10. The bonds were issued to yield 6%. Each $1,000 bond was convertible into 50 shares of wy Company’s no-par common stock. On January 1, Year 4, when the common stock was trading for $12 per share, one-half of the bonds were converted. wy Company uses the effective interest method to account for bond discounts and premiums. The entry to record the conversion of the bonds on January 1, Year 4 would include plese give me answer dont give in image format
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