On January 2, 2023, the Suns, Inc. issued P2,000,000 of 8% convertible bonds at par.The bonds will mature on January 1, 2027 and interest is payable annually every January 1. The bond contract entitles the bondholders to receive 6 shares of P100 par valuecommon stock in exchange for each P1,000 bond. On the date of issue, the prevailingmarket interest rate for similar debt without the conversion option is 10%. On January 1, 2027, the holders of the bonds with total face value of P1,000,000 exercised their conversion privilege. On that date, the bonds were selling at 110 and the Ordinary share at P42. 1. How much of the proceeds from the issuance of convertible bonds should be allocatedto equity? P126,816 2. How much is the interest expense for the year 2024? P190,050 3. The entry to record the conversion on December 31, 2005 will include a credit to APIC of? P365,276 4. How much is the loss on bond reacquisition on December 31, 2005? P67,362 5. How much is the carrying value of the bonds payable as of December 31, 2004? P1,900,502 Show full solution
On January 2, 2023, the Suns, Inc. issued P2,000,000 of 8% convertible bonds at par.The bonds will mature on January 1, 2027 and interest is payable annually every January 1. The bond contract entitles the bondholders to receive 6 shares of P100 par valuecommon stock in exchange for each P1,000 bond. On the date of issue, the prevailingmarket interest rate for similar debt without the conversion option is 10%. On January 1, 2027, the holders of the bonds with total face value of P1,000,000 exercised their conversion privilege. On that date, the bonds were selling at 110 and the Ordinary share at P42. 1. How much of the proceeds from the issuance of convertible bonds should be allocatedto equity? P126,816 2. How much is the interest expense for the year 2024? P190,050 3. The entry to record the conversion on December 31, 2005 will include a credit to APIC of? P365,276 4. How much is the loss on bond reacquisition on December 31, 2005? P67,362 5. How much is the carrying value of the bonds payable as of December 31, 2004? P1,900,502 Show full solution
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 9P
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On January 2, 2023, the Suns, Inc. issued P2,000,000 of 8% convertible bonds at par.The bonds will mature on January 1, 2027 and interest is payable annually every January 1. The bond contract entitles the bondholders to receive 6 shares of P100 par valuecommon stock in exchange for each P1,000 bond. On the date of issue, the prevailingmarket interest rate for similar debt without the conversion option is 10%. On January 1, 2027, the holders of the bonds with total face value of P1,000,000 exercised their conversion privilege. On that date, the bonds were selling at 110 and the Ordinary share at P42.
1. How much of the proceeds from the issuance of convertible bonds should be allocatedto equity? P126,816
2. How much is the interest expense for the year 2024? P190,050
3. The entry to record the conversion on December 31, 2005 will include a credit to APIC of? P365,276
4. How much is the loss on bond reacquisition on December 31, 2005? P67,362
5. How much is the carrying value of the bonds payable as of December 31, 2004? P1,900,502
Show full solution
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