For situation 1, prepare the journal entries through December 31, 2024. Assume that no reversing entries were made. Use theamounts arrived at from using (1) factor tables, (2) a financial calculator, or (3) Excel function PV from the time of sale until thedate indicated. Use the effective interest method for discount and premium amortization. (Hint: Refer to Chapter 3 for tips oncalculating.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 0decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do notindent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.Record journal entries in the order presented in the problem. List all debit entries before credit entries.)DateAccount Titles and ExplanationDebitCredit In the following two independent cases, the company closes its books on December 31:1.2.Larkspur Inc. sells $1.83 million of 8% bonds on March 1, 2023. The bonds pay interest on September 1 and March 1. Thebonds' due date is September 1, 2026. The bonds yield 10%.Coronado Ltd. sells $5.00 million of 9% bonds on June 1, 2023. The bonds pay interest on December 1 and June 1. Thebonds' due date is June 1, 2027. The bonds yield 8%. On October 1, 2024, Coronado buys back $1.00 million worth ofbonds for $2.14 million, including accrued interest.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.Prepare all of the relevant journal entries from the time of sale until the date indicated.

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In the following two independent cases, the company closes its books on December 31: 1. 2. Larkspur Inc. sells $1.83 million of 8% bonds on March 1, 2023. The bonds pay interest on September 1 and March 1. The bonds' due date is September 1, 2026. The bonds yield 10%. Coronado Ltd. sells $5.00 million of 9% bonds on June 1, 2023. The bonds pay interest on December 1 and June 1. The bonds' due date is June 1, 2027. The bonds yield 8%. On October 1, 2024, Coronado buys back $1.00 million worth of bonds for $2.14 million, including accrued interest. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Prepare all of the relevant journal entries from the time of sale until the date indicated.

In the following two independent cases, the company closes its books on December 31: 1. 2. Larkspur Inc. sells $1.83 million of 8% bonds on March 1, 2023. The bonds pay interest on September 1 and March 1. The bonds' due date is September 1, 2026. The bonds yield 10%. Coronado Ltd. sells $5.00 million of 9% bonds on June 1, 2023. The bonds pay interest on December 1 and June 1. The bonds' due date is June 1, 2027. The bonds yield 8%. On October 1, 2024, Coronado buys back $1.00 million worth of bonds for $2.14 million, including accrued interest. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Prepare all of the relevant journal entries from the time of sale until the date indicated.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 5E

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Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
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.
Frost Company has accumulated the following information relevant to its 2019 earningsper share. 1. Net income for 2019: 150,500. 2. Bonds payable: On January 1, 2019, the company had issued 10%, 200,000 bonds at 110. The premium is being amortized in the amount of 1,000 per year. Each 1,000 bond is currently convertible into 22 shares of common stock. To date, no bonds have been converted. 3. Bonds payable: On December 31, 2017, the company had issued 540,000 of 5.8% bonds at par. Each 1,000 bond is currently convertible into 11.6 shares of common stock. To date, no bonds have been converted. 4. Preferred stock: On July 3, 2018, the company had issued 3,800 shares of 7.5%, 100 par, preferred stock at 108 per share. Each share of preferred stock is currently convertible into 2.45 shares of common stock. To date, no preferred stock has been converted and no additional shares of preferred stock have been issued. The current dividends have been paid. 5. Common stock: At the beginning of 2019, 25,000 shares were outstanding. On August 3, 7,000 additional shares were issued. During September, a 20% stock dividend was declared and issued. On November 30, 2,000 shares were reacquired as treasury stock. 6. Compensatory share options: Options to acquire common stock at a price of 33 per share were outstanding during all of 2019. Currently, 4,000 shares may be acquired. To date, no options have been exercised. The unrecognized compens Frost Company has accumulated the following information relevant to its 2019 earnings ns is 5 per share. 7. Miscellaneous: Stock market prices on common stock averaged 41 per share during 2019, and the 2019 ending stock market price was 40 per share. The corporate income tax rate is 30%. Required: 1. Compute the basic earnings per share. Show supporting calculations. 2. Compute the diluted earnings per share. Show supporting calculations. 3. Indicate which earnings per share figure(s) Frost would report on its 2019 income statement.
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