Archer Company issued $4,000,000 par value, 7% convertible bonds at 99 for cash. The net present value of the debt without the conversion feature is $3,800,000. Prepare the journal entry to record the issuance of the convertible bonds.

Archer Company issued $4,000,000 par value, 7% convertible bonds at 99 for cash. The net present value of the debt without the conversion feature is $3,800,000. Prepare the journal entry to record the issuance of the convertible bonds.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 8EB: Allante Corporate issued 50 bonds with a face value of $1,000 and a stated rate of 4% and received...

See similar textbooks

Related questions

Q: of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The…

A: Bond Redemption: A bond redemption is a full refund of the bond's principle (the amount you…

Q: On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds…

A: Redemption of Bond: A bond redemption is a complete repayment of the bond's principal amount (the…

Q: Crane Company has $3930000 of 7% convertible bonds outstanding. Each $1,000 bond is convertible into…

A: Explanation: The Amount on Bonds payable and the premium on bonds payable Both are accounted as…

Q: On December 1, Y4, Boston Corp. issued $4,600,000 (par value), 12%, 5-year convertible bonds for…

Q: For each of the unrelated transactions described below, present the entries required to record each…

A: Convertible bonds are those bonds that receive a fixed amount of interest payments and can be…

Q: On July 1, 2020, 2-SO Company issued 10% bonds with a maturity value of P5,000,000 together with…

A: Premium on Issue of Ordinary Shares = ( Issue Price - Par Value ) x Number of Shares Computation…

Q: Marigold Corp. issued $5840000 of 8%, ten-year convertible bonds on July 1, 2020 at 96.1 plus…

A: Given, Issued Price = $5,840,000 Rate = 8%

Q: Palestine, Inc. issued JOD2,000,000 par value, 7% convertible bonds at 99 for cash. The net present…

A: Bonds are a form of debt or loan issued by the company on which company has to make regular interest…

Q: On January 1, 2016, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. The…

A: 1.

Q: XYZ Inc issued 445 convertible bonds - each at a price of 101.95% of the $1,000 face value. At…

A: A bond may be regarded of as an I.O.U. between the debtor and creditor including the loan…

Q: At the beginning of current year, Sandy Company issued 5,000 convertible bonds payable. The bonds…

A: Convertible bonds are fixed-income security or debt that earns a fixed rate of interest & can be…

Q: Lavish Ltd. issued $4,000,000, six-year, 8% convertible bonds at par. Bonds pay interest annually.…

A: Convertible bonds are corporate bonds that can be exchanged for the issuing company's common stock.…

Q: Whispering Corporation sold 140 convertible, 10-year bonds at par for $140,000. Each bond pays 3%…

A: Journal entries No. Account Title & Explanation Debit Credit (a) Cash 118,378.67…

Q: On August 31, 2015, Chickasaw Industries issued $25 million of its 30-year, 6% convertible bonds…

A: 1.

Q: Irbid Corporation issues 3,000 convertible bonds at January 1, 2018. The bonds have a three year…

A: Bonds are instruments which companies and government uses to raise money. It is simply a debt to the…

Q: urnal entry for April 1, 2021 bond conversion?

Q: Sepracor, Inc. called its convertible debt in 2007. Assume the following related to the transaction:…

A: Bonds refer to a financial instrument that is issued by the bond issuer to the bondholder when the…

Q: On January 1, 20x1, Patience Co. issued 10%, 3-year, P2,000,000 convertible bonds at 105. Each…

A: The question is based on the concept of Financial Accounting.

Q: Air Supply issued $6 million of 9%, 10-year convertible bonds at 101. The bonds are convertible into…

A: Total issue price of the bonds = Face value x issue price…

Q: On January 1, 20x1, Kindess Čo. issued 3- year, 10% P2,000,000 convertible bonds for P2,200,000.…

A: Retirement of Bonds: The Retirement of Bonds refers to the cancellation of bonds due to their…

Q: On January 1, 2018, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. The…

A: 1.

Q: Whispering Corporation sold 140 convertible, 10-year bonds at par for $140,000. Each bond pays 3%…

A: Solution:- Preparation of journal entry to record the issuance of the bonds as follows under:-

Q: On January 1, 2016, Trader Company issued its 8%, 4-year convertible debt instrument with a face…

A: Working note: Computation of equity and financial liability component of financial instrument:

Q: On January 1, 2020, ABC Company issued its 10%, 5-year, P3,000,000 convertible bonds for the face…

A: Bond is a debt security which is issued by large organization to raise the fund. Bond is a cheaper…

Q: Bay Company had P600,000, convertible 8% bonds payable outstanding on June 30. Each P1,000 bond was…

A: Working note: Journal entry for the bond conversion: Date Account titles and explanation Debit…

Q: On January 1, 20x2, Gelato Company issued convertible bonds with a face amount of P5,000,000 for…

Q: Mae Jong Corp. issues $1,000,000 of 10% bonds payable which may be converted into 10,000 shares of…

A: Bonds: Bonds are debts instruments issued by corporates. Bonds are issued at par, premium and…

Q: For each of the unrelated transactions described below, present the entry(ies) required to record…

A: As posted multiple questions, as per our guideline policy we are answering only one question…

Q: For each of the unrelated transactions described below, present the entries required to record each…

A: Bonds payable: It is a long term liability to the organization issuing it. It is issued to raise…

Q: On January 1, 20x1, an entity issues bonds with a face amount of P8,000,000 for P8,600,000. The…

A: Introduction:- Bonds are a sort of investment that is utilized in mutual funds and private…

Q: Richmond Co. sold convertible bonds at a premium. Interest is paid on May 31 and November 30. On May…

A: Convertible Bonds: Convertible bonds are long-term debts issued by a corporation carrying a fixed…

Q: On December 31, 2011, Cey Company had outstanding 10%,P1,000,000 face amount convertible bonds…

A: Share Premium: The difference between the par value of a firm's shares and the total money collected…

Q: On January 1, 20x1, ELABORATE COMPLICATED Co. issued 3-year, 10%, P4,000,000 convertible bonds for…

A: Computation of Fair Value of bonds without the conversion feature @12% (a) Present value…

Q: An entity issues 3,000 convertible bonds at the start of year 1 at par. They have a three year term…

A: solution : given : this is a compound financial instrument The convertible bond has to be divided…

Q: At the beginning of the current year, Cove Company, a closely-held entity, issued 6% bonds with a…

A: Solution Concept In case of the compound financial instrument Compound financial instrument is the…

Q: Garr Co. issued $6,000,000 of 12%, 5-year convertible bonds on December 1, 2018 for $6,025,480 plus…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The company has outstanding bonds payable with a total face value of $100,000. On July 1, the…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step…

Q: AI Tool and Dye issued 8% bonds with a face amount of $160 million on January 1, 2018. The bonds…

A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing…

Q: Sheffield Corp. issued 8100, 6-year convertible bonds of $2000 each for $4150000 at the beginning of…

Q: . • Bianca Capital issued 500, $1,000 convertible bonds at 103. Each bond will be converted to 10…

A: GIVEN Bianca Capital issued 500, $1,000 convertible bonds at 103. Each bond will be converted to…

Q: On December 31, 2020, Tamia Company showed the following balances: Bonds payable - 6% Discount on…

A: "As per bartleby guidelines we will solve the first multiple choice question for you. If you want…

Q: The following are two independent situations. 1. Sandhill Corporation redeemed $130,500 face…

A: Journal entry is a recording of a financial transaction of a business with debit and credit columns…

Q: On May 1, 2018, Luzon Company issued P2,000,000, 5 year, 10% bonds for P2,300,00O. Each P1,000 bonds…

A: Share warrants are the rights attached with the issue of shares which provides the issuer of the…

Q: Archer Inc. issued $4,000,000 par value, 7% convertible bonds at 99 for cash. If the bonds had not…

A: Working note 1: Compute the discount on issue of bonds.

Q: On January 1, 2016, Madison Products issued $40 million of 6%, 10-year convertible bonds at a net…

A: Requirement 1:Prepare the journal entry to record the issuance of convertible bonds.

Q: On January 1, 2021, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. The…

A: Journalize the given transactions in the books of Gless:

Q: At the beginning of the current year, ABC Corporation issued 6,000, 5-year bonds, face value 1,000…

A: Given information, Face value of bonds=6,000*1,000=6,000,000 Cost of the bonds…

Q: For each of the unrelated transactions described below, present the entries required to record each…

A: A journal entry is a form of accounting entry that is used to report a business transaction in a…

Question

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

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.
Willoughby Inc. issued 100 bonds with a face value of $1,000 and a stated rate of 4% and received $105,000. What is the journal entry to record the sale of the bonds?
Allante Corporate issued 50 bonds with a face value of $1,000 and a stated rate of 4% and received $45,000. What is the journal entry to record the sale of the bonds?
Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
Huang Inc. issued 100 bonds with a face value of $1,000 and a 5-year term at $960 each. The journal entry to record this transaction includes ________. A. a debit to Bonds Payable for $100,000 B. a debit to Discount on Bonds Payable for $4,000 C. a credit to cash for $96,000 D. a credit to Discount on Bonds Payable for $4,000
Irving Inc. sold bonds with a $50,000, 10% interest, and 10-year term at $52,000. What is the total amount of interest expense over the life of the bonds?
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
Keys Inc. issued 100 bonds with a face value of $1,000 and a rate of 8% at $1,025 each. The journal entry to record this transaction includes ________. A. a credit to Bonds Payable for $102,500 B. a credit to cash for $102,500 C. a debit to cash for $100,000 D. a credit to Premium on Bonds Payable for $2,500
Waldron Inc. issued $400,000 bonds with a stated rate of 7% when the market rate was 5%. They are 3-year bonds with interest to be paid annually. Prepare a table to amortize the premium of the bonds. Assume that the bonds were issued for $421,844.
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
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?