$100 par value bond. At the time of issuance, the warrants were selling for $5. Skysong has adopted ASPE. (Credit account titles are automatically indented when the 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. List all debit entries before credit entries.) Account Titles and Explanation Option 1: Residual Method Cash Bonds Payable Contributed Surplus - Stock Warrants Option 2: Value Equity component at zero Cash Bonds Payable Debit 35640000 33840000 Credit 33840000 1800000 33840000

$100 par value bond. At the time of issuance, the warrants were selling for $5. Skysong has adopted ASPE. (Credit account titles are automatically indented when the 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. List all debit entries before credit entries.) Account Titles and Explanation Option 1: Residual Method Cash Bonds Payable Contributed Surplus - Stock Warrants Option 2: Value Equity component at zero Cash Bonds Payable Debit 35640000 33840000 Credit 33840000 1800000 33840000

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 11QE

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A company issued 200 $1,000 bonds at 128, and each bond was issued with one detachable stock warrant. Shortly after issuance, the bonds were selling at 102, the warrants had a fair value of $230 per warrant. In the entry to record the issuance of the bonds and warrants, how much should be recorded for Discount (or Premium) on Bonds Payable? (Enter an amount. Please do not put a plus or minus sign in front of the amount.)
For each of the unrelated transactions described below, present the entry required to record the bond transactions. (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. Round answers to 0 decimal places, e.g. 5,275.) 1. On August 1, 2021, Wildhorse Corporation called its 10% convertible bonds for conversion. The $6,600,000 par bonds were converted into 264,000 shares of $20 par common stock. On August 1, there was $660,000 of unamortized premium applicable to the bonds. The fair value of the common stock was $20 per share. Ignore all interest payments.2. Sandhill, Inc. decides to issue convertible bonds instead of common stock. The company issues 10% convertible bonds, par $2,900,000, at 97. The investment banker indicates that if the bonds had not been convertible they would have sold at 94.3. Gomez Company issues $7,800,000 of bonds with a coupon…
Cataloochee Inc. issues bonds, each with one detachable warrant, for $392,000. The bonds are 400, $1,000 6% bonds and they trade at 97 without the warrants. On the day of issue, the fair value of the stock is $45 and the par value is $1. The strike price of the warrants is $25. What is the amount of the entry to record the Stock Warrants?
For each of the unrelated transactions described below, present the entry(ies) required. (a) Partially correct answer iconYour answer is partially correct. Sweet Company issued $11,000,000 par value 5% 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 $2.
A company issued 432 $1,000 bonds at 116, and each bond was issued with one detachable stock warrant. Shortly after issuance, the bonds were selling at 104, but the fair value of the warrants cannot be determined. In the entry to record the issuance of the bonds and warrants, how much should we record for Paid-in Capital – Stock Warrants?
On May 1, 2020, Pearl Company issued 2,500 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. Shortly after issuance, the bonds were selling at 98, but the fair value of the warrants cannot be determined.(a) Prepare the entry to record the issuance of the bonds and warrants. (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 Credit (b) Assume the same facts as part (a), except that the warrants had a fair value of $24. Prepare the entry to record the issuance of the bonds and warrants. (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…
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.…
For 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.
For each of the unrelated transactions described below, present the entries required to record each transaction. Please fill in all the boxes as shown in the image. 1. Headland 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. 2. Sage 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. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. 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 July 1, 2020. On July 1, there was $51,000 of unamortized discount applicable to the bonds, and the company paid an additional $68,000 to the bondholders to induce conversion of all the bonds. The company records…
On May 1, 2020, Larkspur Company issued 1,900 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. Shortly after issuance, the bonds were selling at 97, but the fair value of the warrants cannot be determined.(a) Prepare the entry to record the issuance of the bonds and warrants. (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 Credit (b) Assume the same facts as part (a), except that the warrants had a fair value of $35. Prepare the entry to record the issuance of the bonds and warrants. (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. Round intermediate calculations to 5…
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Ayayai Corp. issued $ 18,600,000 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. Pina Company issued $ 18,600,000 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 $ 5. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 12%, $ 9,300,000 par value bonds were converted into 930,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $ 51,000 of unamortized discount applicable to the bonds, and the company paid an additional $ 78,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.…
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Pronghorn Corp. issued $21,600,000 par value 11% convertible bonds at 97. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Stellar Company issued $21,600,000 par value 11% bonds at 96. 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%, $10,900,000 par value bonds were converted into 1,090,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $55,000 of unamortized discount applicable to the bonds, and the company paid an additional $78,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.