FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The information below pertains to Hood Company for 2026. Net income for the year $9,410,000 6% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 60 shares of common stock 4,930,000 4% convertible, cumulative preferred stock, $100 par value; each share is convertible into 4 shares of common stock 2,450,000 Shares of common stock, $1 par value 9,760,000 Tax rate for 2026 20% Average market price of common stock, per share 20 There were no changes during the year in the number of common
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- Give me correct answer with explanation.jarrow_forwardOn January 1, 2024, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. • The bonds pay interest on June 30 and December 31. • Each $1,000 bond is convertible into 40 shares of Gless's no par common stock. • Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 10% of the issue as an investment. Required: 1. Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. 2. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight- line method. 3. On July 1, 2029, when Gless's common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method). Complete this question by entering your answers in the tabs below.…arrow_forward1. Rahman Company began 2022 with 690,000 shares of common stock outstanding. On September 1, 2022 there was a 2 for 1 stock split. On November 1, 2022, the company repurchased 270,000 shares of treasury stock. 2. Net Income for 2022 was $18,990,000 and the corporate tax rate is 25%. 3. 4% convertible preferred stock was outstanding all year. Each share has a par value of $100 and the total par value is $18,000,000. Each preferred share is convertible into 3 shares of common stock. 4. In 2015, 8% bonds (maturing in 10 years) were issued at 98. The discount is being amortized on a straight-line basis. The bonds have a $1,000 par value each for a total par value of $12,000,000. Each bond is convertible into 2 shares of common stock. 5. On March 1, 2022, Rahman had a second issuance of convertible bonds at their stated rate of 9%. Each $1,000 bond is convertible into 6 shares of common stock. The total par is $15,000,000. 6.…arrow_forward
- Clear 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_forwardThe information below pertains to TV Johnny Company for Year 11: Net income for the year $1,200,000 7% convertible bonds issued at par ($1,000 bond); each bond convertible into 30 shares of common stock 2,000,000 6% convertible, cumulative preferred stock, $100 par value; each share convertible into 3 shares of common stock 4,000,000 Common stock, $10 par value 6,000,000 Income tax rate for Year 11 20% Average market price of common stock during Year 11 $25 per share Market price of common stock on December 31, Year 11 $30 per share There were no changes during Year 11 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common…arrow_forwardanswer in text form please (without image)arrow_forward
- Oriole Corporation issued $6600000 of 9%, ten-year convertible bonds on July 1, 2024 at 96.1 plus accrued interest. The bonds were dated April 1, 2024 with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2025, $1320000 of these bonds were converted into 600 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. If Interest Payable was credited when the bonds were issued, what amount should be debited to Interest Expense on October 1, 2024? O $155100 O $297000 O $141900 O $148500arrow_forwardThe table below shows a partial view of Webster Corporation's balancesheet. Webster CorporationBalance Sheet (partial)At December 31, 2021 Long-term debt Notes payable 10% $2,000,00010% convertible bonds payable 2,500,00012% convertible bonds payable 3,000,000Total long-term debt $7,500,000 Stockholders' equity 6% cumulative, convertiblepreferred stock, $100 par, 50,000shares outstanding. 5,000,000 Common stock, $1 par, 600,000shares outstanding. 600,000Additional paid-in capital 2,500,000 Retained earnings 8,500,000Total stockholders' equity $16,600,000 Notes and Assumptions December 31, 20211. Options were granted in December 2020 to purchase 25,000 shares of common stock at $25 per share. The average market price of common stock during 2021 was $35 per share. All options are still outstanding atthe end of 2021 2. Both the 10 percent and 12 percent convertible bonds were issued in2020 at face value. Each convertible bond is convertible into 50 shares of common stock.…arrow_forwardsarasota corporation has 9% convertible bonds outstanding. it recorded interest expense (net of income taxes) Oven $6,300 on these bonds during the year. The bonds are convertible into 2500 shares of common stock. compute the impact of these convertible bonds on Sarasota diluted earnings per share.arrow_forward
- During the current year, High Corporation had 3 million shares of common stock outstanding. $5,000,000 of 6% convertible bonds were issued at face amount at the beginning of the year. High reported income before tax of $4 million and net income of $3 million for the year. The bonds are convertible into 625,000 shares of common. What is diluted EPS (rounded)? A. $0.89. B. $0.91. C. $1.00. D. $1.08arrow_forward7. At December 31, 2024, DEF Corporation had outstanding 200,000 shares of common stock. Also outstanding were 80,000 shares of preferred stock convertible into 64,000 common shares and $2,000,000 of 10% bonds convertible into 30,000 common shares. DEF's net income for the year ended December 31, 2024, is $1,140,000. The income tax rate is 25%. DEF paid dividends of $3 per share on its preferred stack during 2024. Required: Compute basic and diluted earnings per share for the year ended December 31, 2024, considering possible antidilutive effects.arrow_forward
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