Jackson Metals, Inc., issued a $1,000 convertible corporate bond. Each bond is convertible to 47 shares of the firm's common stock. a. What price must the common stock reach before investors would consider converting their bond to common stock? (Round your answer to 2 decimal places. Omit the "S" sign in your response.)

Jackson Metals, Inc., issued a $1,000 convertible corporate bond. Each bond is convertible to 47 shares of the firm's common stock. a. What price must the common stock reach before investors would consider converting their bond to common stock? (Round your answer to 2 decimal places. Omit the "S" sign in your response.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Packard, Inc. decides to issue convertible bonds instead of common stock. The company issues 10% convertible bonds, par $3,000,000, at 97. The investment banker indicates that if the bonds had not been convertible they would have sold at 94.
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1) Kameela Inc. has $ 3,000,000 (par value), 8% convertible bonds outstanding. Each $ 1,000 bond is convertible into thirty no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2020, the holders of $ 900,000 worth of bonds exercised the conversion privilege. On that date the market price of the bonds was 105, the market price of the common shares was $ 36, the carrying value of the common shares was $ 18 and the Contributed Surplus Conversion Rights account balance was $ 450,000. The total unamortized bond premium at the date of conversion was $ 210,000. Using the book value method, Kameela should record, as a result of this conversion? Calculate the amount and present it in the books!
Requirement 2 (50%) Record the following transactions in the General Journal: When the market rate was 12%, Winnifred Corp. issued $2,000,000, 14%, 5-year bonds. Interest is payable semiannually on June 30 and December 31. The corporation uses the effective interest method of amortizing bond premium or discount. (It would be a good idea to construct a bond amortization schedule) Issued 20,000 Common Shares for 50,000 cash. Declared cash dividends in the amount of $50,000 to be distributed to the shareholders of record on March 9. Dividends will be paid on March 15. Declared a 1 for 2 stock split on Common Shares outstanding. Paid the cash dividend declared on Mar 5. Made the first interest payment on the bond. The company uses the effective interest method. Repurchased 10,000 common shares, the market price was $5 per share. Jan 1 Jan 1 Mar 5 Mar 10 Mar 15 Jun 30 July 20 Jun 30 Made the first interest payment on the bond. The company uses the effective interest method. July 20…
25) Harrell's Barrels issued $100 million of 6% convertible bonds at 101. Each $1,000 bond is convertible into 45 shares of Harrell's no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 98. Harrell applies International Financial Reporting Standards. Recording the issuance of the bonds would cause an increase in Harrell's: A) shareholders' equity of $1,000,000. B) shareholders' equity of $3,000,000. C) assets of $98,000,000. D) liabilities of $101,000,000.
Looking for answer. Please include all calculations for my reference. Thanks!
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Sage Corp. issued $20,100,000 par value 10% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Pronghorn Company issued $20,100,000 par value 10% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 11%, $9,100,000 par value bonds were converted into 910,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $60,000 of unamortized discount applicable to the bonds, and the company paid an additional $81,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.…
A $1,000 corporate bond is convertible to 40 shares of the corporation's common stock. What is the minimum price that the stock must obtain before bondholders would consider converting the bond to stock?
Ee 480.
A4
Whispering Company issued $9,000,000 par value 5% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $2. (Credit account titles are automatically indented when 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.)
Corporation A issues a $100,000, six-year convertible bond at 104 on January 1, 19B. This bond is convertible into 1,000 shares of $100 par common stock. Three years later, when the market value of the stock is $120, the bondholder converts the bond and receives a $500 “sweetener.” Prepare the entries for the original issuance and the conversion.

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