Chandelier Company issued 4-year P5,000,000 face value of 14% convertible bonds at 106 on January 1,2020, maturing on January 1, 2025 and paying interest annually on December 31. It is reliably ascertained that the bonds would sell at P5,100,000 without the conversion feature with an effective yield of 12%. Each P1,000 bond is convertible into 10 shares of P100 par value share capital. What is the entry to record the issuance of bonds? Prepare other necessary journal entries relating to the problem

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A: Equity component = Issue price of the bonds - fair value of the bond without the conversion…

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A: Face value of the bonds = 5,000 x P1000                                        = P5,000,000 Interest…

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A: Solutions: 1) Conversion Premium = Fair value of Bond - Fair value of Equity Share…

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A: a. % of bond converted = $210,000/$2,100,000 = .10 or 10% Period of Amortization = 10 x 12 = 120…

Q: On January 1, 2019, Shenzhen ltd. Issued a 10% convertible bond at par, with a face value $100,000…

A: A convertible bond represents a bond that can be converted into certain number of shares by its…

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A: Solution : Given Coupon rate       = 8% Face amount     =6000000 Interest payable every 31 december…

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A: Valuation of Bond Journal Entries

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A: SOLUTION IN THE BOOKS OF STEELIX CORPORATION

Q: Prepare all the necessary journal entries assuming the share warrants are fully exercised.

A: Issue price of bonds with warrants (5,000,000 x 103) =  515,000,000 Market value of bonds without…

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

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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?

A:

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A: Bonds can be converted to the number of shares upon the expiration of bond. Or bonds may be retired…

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A: A convertible bond is a type of bond that delivers the bond-holder an option or a choice to convert…

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A: Convertible bonds are a type of bonds issued by the organization, where at the time of maturity of…

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A: Conversion of Bonds:-Convertible Bond It a type of debt  issued by company for which company pays…

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

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A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

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A: A bond is a borrowing security issued by a company ta raises funds from the market by making an…

Q: On January 1, 2019, Lin plc issued a convertible bond with a par value of £50,000 inthe market for…

A: Hey, since there are multiple sub parts posted, we will answer first three sub parts. If you want…

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A: These are the accounting transactions that are having a monetary impact on the financial statement…

Q: How much is the Share Premium arising from the exercise of share warrants?

A: As per our protocol we provide solution to the one question only but you have asked two questions…

Q: On December 31, 2021, HULK Corporation had outstanding ₱20,000,000 face value convertible bonds…

A: SOLUTION- WORKING NOTE- CALCULATION OF AMOUNT TO BE DEBITED FROM SHARE PREMIUM ACCOUNT- THE VALUE OF…

Q: On January 1, 2017. Bonobo Co. issued S20,000,000 of 10% bonds due in 10 years. Each $1,000 bond is…

A: Under the Straight-line method of amortization the coupon payment i.e. cash interest of 2000000 will…

Q: On January 1, 2020, MANGO Corp. issues $100 million of convertible bonds at par value. The bonds…

A: Part 1:

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A: a. Note: 0.79383 value taken from PVIF table (8% , 3 years),            2.57710 value taken from…

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A:

Q: Kingbird Inc. issued $2,100,000 of convertible 10- year bonds on july 1,2020. The bonds provide for…

A: In journal transactions are recorded chronologically and information regarded financial transaction…

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A: Working note: Computation of equity portion of the bond: Computation of carrying amount of bond…

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A: The bonds issued are recorded as bonds payable and these represent the long-term liabilities. When a…

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A: The gain or loss to be written off on conversion of bonds is the book value of the bonds less the…

Q: Mercedes Company issued P 10,000,000 face value 12% convertible bonds at 110 on January 1,2020,…

A: 1) Let us first convert the bonds into shares -

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A: Shareholder’s equity is also known as Net Worth or Stockholder’s equity. It can be calculated by…

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A: a) Prepare the journal entries as on August 1, 2021.

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Q: What is the equity component of the issuance of the convertible bonds on January 1, 2019? What…

A: Convertible bonds are the bonds issued with a right to convert into equity shares after a specified…

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A: The convertible bond can be converted into equity shares but it is not equity shares until it is…