19. Beach Company bad P600,000 convertible 8% bonds payable outstanding or June 30, 2011. Each P1,000 bond was convertible into 10 ordinary shares of P50 par value. On July 1, 2011, the interest was paid to bondholders, and the bonds were converted into ordinary shares, which had a fair value of P75 per share. The unamortized premium on these bonds was P12,000 at the date of conversion. No equity component was

19. Beach Company bad P600,000 convertible 8% bonds payable outstanding or June 30, 2011. Each P1,000 bond was convertible into 10 ordinary shares of P50 par value. On July 1, 2011, the interest was paid to bondholders, and the bonds were converted into ordinary shares, which had a fair value of P75 per share. The unamortized premium on these bonds was P12,000 at the date of conversion. No equity component was

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter15: Shareholders’ Equity: Capital Contributions And Distributions

Section: Chapter Questions

Problem 21E

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On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortization
Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight line method) and dividends on each security during 2019. Each of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.
20. On December 31, 2011, Cey Company had outstanding 10%,P1,000,000 face amount convertible bonds payable maturing on December 31, 2014. Interest is payable on June 30 and December 31. Each P1,000 bond is convertible into 50 shares of P10 par value. On December 31, 2011, the unamortized premium on bonds payable was P60,000. On December 31, 2011, 400 bonds were converted when Cey's share had a market price of P24. Cey incurred P4,000 in connection with the conversion. No-equity component was recognized when the bonds were originally issued. What is the share premium from the issuance of shares as a result of the bond conversion on December 31, 2011? * a. 176,000 b. 220,000 c. 276,000 d. 280,000
LO1. Swifty Corporation has $3,810,000 of 9% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2021, the holders of $1,270,000 bonds exercised the conversion privilege. On that date, the market price of the bonds was 104 and the market price of the common stock was $35. The total unamortized bond premium at the date of conversion was $276,000. As a result of this conversion, what should Swifty record?
Please answer the requirements Bay Company had P600,000, convertible 8% bonds payable outstanding on June 30. Each P1,000 bond was convertible into 1 ordinary shares of P50 par value. On July 1, the interest was paid to bondholders, and the bonds were converted into ordinary shares, which had a fair value of P75 per share. The unamortized premium on these bonds was P12,000 at the date of conversion. No equity component was recognized when the bonds were originally issued. Requirements What amount should be recorded as increase in share capital as result of the bond conversion? What amount should be recorded as increase in share premium as a result of the bond conversion?
Crane Company has $3930000 of 7% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2021, the holders of $1230000 bonds exercised the conversion privilege. On that date the market price of the bonds was 106 and the market price of the common stock was $36. The total unamortized bond premium at the date of conversion was $277000. Crane should record, as a result of this conversion, a loss of $12300. credit of $88640 to Premium on Bonds Payable. credit of $183270 to Paid-in Capital in Excess of Par. credit of $208870 to Paid-in Capital in Excess of Par.
On May 1, 2018, Luzon Company issued P2,000,000, 5 year, 10% bonds for P2,300,000. Each P1,000 bonds had two detachable warrants eligible for the purchase of one share of Luzon’s P100 par ordinary share for P120. Without the warrants the bonds are selling at P2,078,000. What amount should Luzon Company recognize as value of the share warrants?
4.Cove Corp. issued 6% bonds with a maturity value ofP6,000,000, together with 100,000 shares of its P5 parvalue ordinary shares, for a combined cash amount ofP11,000,000.The market value of Cove's sharescannot be ascertained.If the bonds were issuedseparately, they would have sold for P4,000,000 on an8% yield to maturity basis.What amount should Covereport for share premium on the issuance of theshares? a.P7,000,000 c.P5,000,000 b.P6,500,000 d.P4,500,000
Pluto Company had P600,000 convertible 8% bonds payable outstanding on June 30. Each P1,000 bond was convertible into 10 ordinary shares of P50 par value. On July 1, the interest was paid to bondholders, and the bonds were converted into ordinary shares, which had a fair value of P75 per share. The unamortized premium on these bonds was P12,000 at the date of conversion. No Equity component was recognized when the bonds were originally issued. What amount should be recorded as increase in share capital as a result of the bond conversion? 300,000 b. 306,000 c. 450,000 d. 600,000 (10-7-141) Refer to no. 14. What amount should be recorded as increase in share premium as a result of the bond conversion? 312,000 b. 306,000 c. 162,000 d. 12,000
On December 31, 2021, Glimmer Company had outstanding P3,000,000 8% convertible bonds that mature on December 31, 2023. Interest is payable annually every December 31 and each P1,000 bond is convertible into 30 ordinary shares with a P20 par value per share. The unamortized discount was P200,000 and the equity component when the bonds were sold was P700,000. On the same date, 1,200 bonds were converted when the fair value of Glimmer’s share was P40. What amount of share premium should Glimmer recognize as a result of the conversion?
2. On July 1, 2012, Abysmal Company issued 6% bonds with a maturity value of P6,000,000, together with 10,000 ordinary shares with P50 par value for a combined cash amount of P11,000,000. The market value of the ordinary share cannot be determined. If the bonds were issued separately, the bonds would have sold for P4,000,000 on an 8% yield to maturity basis. What amount should be reported for share premium on the issuance of the ordinary shares? a. 7,500,000 b. 6,500,000 c. 5,500,000 d. 4,500,000