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Introduction: The process where commercial transactions are recorded in the books of accounts is known as a
To prepare: The journal entries in regards to issuance of bonds
2)
Introduction: The process where commercial transactions are recorded in the books of accounts is known as a journal entry. The double-entry technique becomes the foundation for the purpose of documenting the journal entry. As the transactions are entered into the books as and when they occur hence the journal is often referred to as a day book.
To prepare: The journal entries in regard to issuance of bonds
3)
Introduction: The process where commercial transactions are recorded in the books of accounts is known as a journal entry. The double-entry technique becomes the foundation for the purpose of documenting the journal entry. As the transactions are entered into the books as and when they occur hence the journal is often referred to as a daybook.
To prepare: The journal entries in regard to conversion of bonds
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Intermediate Accounting, 17th Edition
- For each of the unrelated transactions described below, present the entries required to record each transaction. P 1. 2. 3. Waterway Corp. issued $18,700,000 par value 9% convertible bonds at 99. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Wildhorse Company issued $18,700,000 par value 9% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 10%, $9,400,000 par value bonds were converted into 940,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $54,000 of unamortized discount applicable to the bonds, and the company paid an additional $71,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…arrow_forwardFor each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Concord 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. Marigold 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. Suppose Sepracor, Inc. called its convertible debt in 2025. 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, 2025. 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. (List all debit…arrow_forwardWaterway Inc. issued $3,830,000 par value, 7% convertible bonds at 98 for cash. If the bonds had not included the conversion feature, they would have sold for 95.Prepare the journal entry to record the issuance of the bonds. Account Titles and Explanation Debit Creditarrow_forward
- For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Splish Corp. issued $19,300,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Blossom Company issued $19,300,000 par value 10% bonds at 98. 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%, $9,700,000 par value bonds were converted into 970,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $56,000 of unamortized discount applicable to the bonds, and the company paid an additional $79,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.…arrow_forwardFor each of the unrelated transactions described below, present the entries required to record each transaction. 1. Blossom Corp, issued $18,900,000 par value 9% 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. Blue Company issued $18,900,000 par value 9% 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 10%, $10,800,000 par value bonds were converted into 1,080,000 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 $69,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.arrow_forwardFor each of the unrelated transactions described below, present the entries required to record each transaction. 1. Marin Corp. issued $18,800,000 par value 11% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Headland Company issued $18,800,000 par value 11% bonds at 98. 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 12%, $10,100,000 par value bonds were converted into 1,010,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $52,000 of unamortized discount applicable to the bonds, and the company paid an additional $75,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.arrow_forward
- For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Bridgeport Corp. issued $18,800,000 par value 11% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Indigo Company issued $18,800,000 par value 11% bonds at 98. 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 12%, $10,100,000 par value bonds were converted into 1,010,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $52,000 of unamortized discount applicable to the bonds, and the company paid an additional $75,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.…arrow_forwardCurrent Attempt in Progress For each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Windsor Corp. issued $21,400,000 par value 9% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. 1. Sheridan Company issued $21,400,000 par value 9% 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 $5. (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.) 2. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 10%, $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on…arrow_forwardOn the day Federer Ltd redeemed its $1,000,000 face value bonds at 98, their carrying value was $1,200,000. Prepare a residual analysis for the bond redemption. Prepare the journal entry for the bond redemption. If you recognise a gain or loss, state where in the Statement of Comprehensive Income the gain or loss should appeararrow_forward
- (Issuance and Conversion of Bonds) For each of the unrelated transactions described below,present the entry(ies) required to record each transaction.1. Ehrlich Corp. issued $50,000,000 par value 8% convertible bonds at 102. If the bonds had not been convertible, thecompany’s investment banker estimates they would have been sold at par.2. On October 31, 2021, Ehrlich Corp. called its 10% convertible debenture bonds for conversion. The $60,000,000 parvalue bonds were converted into 600,000 shares of $1 par value common stock. On October 31, there was $155,000of unamortized premium applicable to the bonds, and the company paid an additional $355,000 to the bondholders toinduce conversion of all the bonds. The company records the conversion using the book value method. 3. Ehrlich Corporation issued 2,000 shares of $10 par value common stock upon conversion of 1,000 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share. The common stock is…arrow_forwardMetlock Inc. issued $3,830,000 par value, 7% convertible bonds at 98 for cash. If the bonds had not included the conversion feature, they would have sold for 95. Prepare the journal entry to record the issuance of the bonds. (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.) Account Titles and Explanation Debit Creditarrow_forwardBonds Payable has a balance of $1,137,000 and Discount on Bonds Payable has a balance of $13,644. If the issuing corporation redeems the bonds at 98, what is the amount of gain or loss on redemption? a.$13,644 loss b.$9,096 loss c.$9,096 gain d.$13,644 gainarrow_forward
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