Crane Co. has $3860000 of 8% convertible bonds outstanding. Each $1000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2025, the holders of $1158000 bonds exercised the conversion privilege. On that date, the market price of the bonds was 105 and the market price of the common stock was $37. The total unamortized bond premium at the date of conversion was $270000. Crane should record, as a result of this conversion, a O credit of $196800 to Paid-in Capital in Excess of Par. O credit of $172200.00 to Paid-in Capital in Excess of Par. O loss of $11580. O credit of $86400 to Premium on Bonds Payable.

Crane Co. has $3860000 of 8% convertible bonds outstanding. Each $1000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2025, the holders of $1158000 bonds exercised the conversion privilege. On that date, the market price of the bonds was 105 and the market price of the common stock was $37. The total unamortized bond premium at the date of conversion was $270000. Crane should record, as a result of this conversion, a O credit of $196800 to Paid-in Capital in Excess of Par. O credit of $172200.00 to Paid-in Capital in Excess of Par. O loss of $11580. O credit of $86400 to Premium on Bonds Payable.

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...

See similar textbooks

Similar questions

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.
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortization
On March 1, 2025, Cullumber Corporation issued $1920000 of 8% nonconvertible bonds at 104. The bonds are due on February 28, 2041. In addition, each $1000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase. one share of Cullumber's $25 par value common stock for $50. The bonds without the warrants would sell at 95. On March 1, 2025, the fair value of Cullumber's common stock was $40 per share and the fair value of the warrants was $2 per stock warrant. What amount should Cullumber record on March 1, 2025 as paid-in capital from stock warrants? O $81040 O $70240 O $99840 O $96000
Sandhill Co. has $3890000 of 7% convertible bonds outstanding. Each $1000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2025, the holders of $1167000 bonds exercised the conversion privilege. On that date, the market price of the bonds was 105 and the market price of the common stock was $37. The total unamortized bond premium at the date of conversion was $288000. Sandhill should record, as a result of this conversion, a O loss of $11670. O credit of $176700.00 to Paid-in Capital in Excess of Par. O credit of $203100 to Paid-in Capital in Excess of Par. O credit of $92160 to Premium on Bonds Payable.
Crane Company has $3930000 of 7% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2021, the holders of $1230000 bonds exercised the conversion privilege. On that date the market price of the bonds was 106 and the market price of the common stock was $36. The total unamortized bond premium at the date of conversion was $277000. Crane should record, as a result of this conversion, a loss of $12300. credit of $88640 to Premium on Bonds Payable. credit of $183270 to Paid-in Capital in Excess of Par. credit of $208870 to Paid-in Capital in Excess of Par.
Culver Corp. has two issues of securities outstanding: no par value common shares and 8% convertible bonds with a par value of $8400000. Bond interest payment dates are June 30 and December 31. The conversion clause in the bond indenture entitles the bondholders to receive 40 common shares in exchange for each $1000 bond. The value of the equity portion of the bond issue is $52000. On June 30, 2023, the holders of $1176000 par value bonds exercise the conversion privilege. The market price of the bonds on that date is $1100 per bond and the market price of the common shares is $36. The total unamortized bond discount at the date of conversion is $493000. In applying the book value method, what amount should Culver credit to Common Shares as a result of this conversion? $1252300 O $1106980 $1114260 O $1099700
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
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
On May 1, 2025, Sunland Co. issued $1590000 of 8% bonds at 102. The bonds are due on April 30, 2031. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Sunland's common stock, $15 par value, were attached to each $1000 bond. The bonds without the warrants would sell at 96. On May 1, 2025, the fair value of Sunland's common stock was $35 per share and of the warrants was $2. On May 1, 2025, Sunland should credit Paid-in Capital from Stock Warrants for O $60672. O $63600. O $64872. O $95400.
On January 1, 2021, Madison Products issued $75 million of 8%, 10-year convertible bonds at a net price of $75.5 million. Madison recently issued similar, but nonconvertible, bonds at 99 (that is, 99% of face amount). The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 30 shares of Madison’s no par common stock. Madison records interest by the straight-line method.On June 1, 2023, Madison notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2023. By June 30 all bondholders had chosen to convert their bonds into shares as of the interest payment date. On June 30, Madison paid the semiannual interest and issued the requisite number of shares for the bonds being converted.In this question, combine the discount on the bonds with the face amount, and record the net amount as bonds payable. This is the “net method.” When the net method is used, the discount (or premium) is amortized directly to the bonds…
On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face value convertible bonds at 110. Each P 5,000 bond is convertible into 10 shares of P 100 par value ordinary shares on the date of maturity. Without the conversion feature, the bonds can be sold at 105. 1. What if before maturity date, bond conversion privilege is fully exercised? Provide the journal entries for each problems and assumptions
On January 1, 2024, Fowl Products issued $80 million of 6%, 10-year convertible bonds at a net price of $81.6 million. Fowl recently issued similar, but nonconvertible, bonds at 99 (that is, 99% of face amount). The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 30 shares of Fowl’s no par common stock. Fowl records interest by the straight-line method. On June 1, 2026, Fowl notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2026. By June 30 all bondholders had chosen to convert their bonds into shares as of the interest payment date. On June 30, Fowl paid the semiannual interest and issued the requisite number of shares for the bonds being converted. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.