On August 1, 2022, United Corporation issued $10 million of 8% convertible bonds at 105. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of United $5 par common stock. World Company purchased 10% of the bond issue. On August 1, 2022, the market value per share for United stock was $56 and the market value of each warrant was $6. In March 2028, when United common stock had a market price of $70 per share and the unamortized premium balance was $300,000, World exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2022, to record the issuance of the bonds by United. 2. record the exercise of the warrants. Prepare the journal entries by United in March 2028 to
On August 1, 2022, United Corporation issued $10 million of 8% convertible bonds at 105. The bonds mature in 20 years. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of United $5 par common stock. World Company purchased 10% of the bond issue. On August 1, 2022, the market value per share for United stock was $56 and the market value of each warrant was $6. In March 2028, when United common stock had a market price of $70 per share and the unamortized premium balance was $300,000, World exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2022, to record the issuance of the bonds by United. 2. record the exercise of the warrants. Prepare the journal entries by United in March 2028 to
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 21E: On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be...
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![On August 1, 2022, United Corporation issued $10 million of 8% convertible bonds at 105. The bonds mature in 20 years. Each $1,000 bond was issued with 20
detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of United $5 par common stock. World Company purchased 10%
of the bond issue. On August 1, 2022, the market value per share for United stock was $56 and the market value of each warrant was $6. In March 2028, when
United common stock had a market price of $70 per share and the unamortized premium balance was $300,000, World exercised the warrants it held.
Required:
1. Prepare the journal entries on August 1, 2022, to record the issuance of the bonds by United. 2.
record the exercise of the warrants.
Prepare the journal entries by United in March 2028 to](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc97544c3-93d9-4d67-9aac-f943a389b5a8%2F7792683a-00a5-4e75-9642-e7b9712b0e3f%2Frtl8tq_processed.png&w=3840&q=75)
Transcribed Image Text:On August 1, 2022, United Corporation issued $10 million of 8% convertible bonds at 105. The bonds mature in 20 years. Each $1,000 bond was issued with 20
detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of United $5 par common stock. World Company purchased 10%
of the bond issue. On August 1, 2022, the market value per share for United stock was $56 and the market value of each warrant was $6. In March 2028, when
United common stock had a market price of $70 per share and the unamortized premium balance was $300,000, World exercised the warrants it held.
Required:
1. Prepare the journal entries on August 1, 2022, to record the issuance of the bonds by United. 2.
record the exercise of the warrants.
Prepare the journal entries by United in March 2028 to
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