FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Suppose Google, Inc. called its convertible debt in 2017. Assume the following related to the transaction. The 8%, $3,900,000 par
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- On June 30, 2024, Blair Industries had outstanding $94 million of 7% convertible bonds that mature on June 30, 2025. Interest is payable each year on June 30 and December 31. The bonds are convertible into 8 million shares of $10 par common stock. On June 30, 2024, the unamortized balance in the discount on bonds payable account was $4 million. On June 30, 2024, half the bonds were converted when Blair's common stock had a market price of $38 per share. When recording the conversion, Blair should credit paid-in capital-excess of par: Multiple Choice $7 million. $9 million. $5 million. $3 million.arrow_forwardOn October 1, 2015, Redoubtable Corp. issued 5%, 10-year bonds with a face value of $3,000,000 at 104%. On October 1 and April 1, interest is paid. Any premiums or discounts are amortized on a straight-line basis. If you were preparing Redoubtable Corporation’s income statement for December 31, 2015, what bond interest expense would you report?arrow_forwardOn January 1, 2016, Cooper Corporation issued $800,000 of 12.5% bonds due January 1, 2023, at 102. The bonds pay interest semiannually on June 30 and December 31. Each $1,000 bond carried 10 warrants which allowed the acquired to exchange 1 share of $10 par common stock for $50. Sometime after the bonds were issued the bonds were quoted at 98 ex-rights and each individual warrant was quoted at $5. Subsequently, on April 30, 2017, 2,000 rights were exercised. Required: 1. Prepare the journal entry to record the bond issue. 2. Prepare the journal entries on April 30, 2017, to record the exchange of the warrants for common shares.arrow_forward
- 1)arrow_forwardOn August 1, 2011, Airport Company sold Paxton Company $1,000,000 of 10-year, 6% bonds, dated July 1 at 100 plus accrued interest. On March 1, 2012, Paxton sold half of the bonds for $520,000 plus accrued interest. Present entries to record the following transactions: Paxton Company: (1) Purchase of bonds on August 1, 2011. (2) Receipt of first semiannual interest amount on December 31, 2011. (3) The sale of the bonds on March 1, 2012.arrow_forwardClear Water Corp. issued $100,000 of 7% 5 year convertible bonds on January 1, 2015. The bonds were issued at 104 and pay interest on June 30 and December 31 of each year. By December 31, 2018, the market price of the stock had increased, and the investors decided to convert the bonds into stock. Each $1,000 bond is convertable into 30 shares of the $2 par value common stock. Determine the balance of the Premium on the bonds and prepare the journal entry to record the conversion of the bonds. (two questions) GENERAL JOURNAL POST Date Account/Description REF. Debit Creditarrow_forward
- On January 1, 2024, Madison Products issued $45 million of 8%, 10-year convertible bonds at a net price of $45.5 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, 2026, Madison 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, Madison paid the semiannual interest and issued the requisite number of shares for the bonds being converted. Required: Assume that Madison Products prepares its financial statements according to International Financial Reporting Standards using the net method. 1. & 2. Prepare the journal entries for the issuance of the bonds by…arrow_forwardBlossom Corporation has outstanding 2,000 of $1,000 bonds, each convertible into 70 shares of $10 par value common stock. The bonds are converted on December 31, 2025, when the unamortized discount is $28,000 and the market price of the stock is $21 per share. Record the conversion using the book value approach. (List all debit entries before credit entries. 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 O for the amounts.) Account Titles and Explanation Debit Creditarrow_forwardThe balance sheet of River Electronics Corporation as of December 31, 2023, included 13.25% bonds having a face amount of $90.4 million. The bonds had been issued in 2016 and had a remaining discount of $3.4 million at December 31, 2023. On January 1, 2024, River Electronics called the bonds before their scheduled maturity at the call price of 104.arrow_forward
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