On January 1, 2020, Crane Corporation issued $8 million of 10-year,7% convertible debentures at 106. Investment bankers believe hat the debenture would have sold at 103 without the conversion privilege. Interest is to be paid semi-annually on June 30 and December 31. Each $1.000 debenture can be converted into 5 common shares of Crane after December 31, 2021. On January 1, 2022, $496,000 of debentures are converted into common shares, and on March 31, 2022, an additional $496,000 of debentures are converted into common shares. Fair value of Crane's common shares is $106 and $111 per share on January 1, 2022, and March 31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line pasis. Crane follows ASPE. Ac Qu Acc Qu Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted as a irst entry.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round untermediate percentage calculations to 3 decimal places, e.g. 1.246% and final answers to 0 decimal places, e.g. 5,275.) Acc Qu Ace Date Account Titles and Explanation Debit Credit December 31, Qu Ace 2021 Que Acco Que Acco January 1, 2022 Viev Acco
On January 1, 2020, Crane Corporation issued $8 million of 10-year,7% convertible debentures at 106. Investment bankers believe hat the debenture would have sold at 103 without the conversion privilege. Interest is to be paid semi-annually on June 30 and December 31. Each $1.000 debenture can be converted into 5 common shares of Crane after December 31, 2021. On January 1, 2022, $496,000 of debentures are converted into common shares, and on March 31, 2022, an additional $496,000 of debentures are converted into common shares. Fair value of Crane's common shares is $106 and $111 per share on January 1, 2022, and March 31, 2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line pasis. Crane follows ASPE. Ac Qu Acc Qu Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted as a irst entry.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round untermediate percentage calculations to 3 decimal places, e.g. 1.246% and final answers to 0 decimal places, e.g. 5,275.) Acc Qu Ace Date Account Titles and Explanation Debit Credit December 31, Qu Ace 2021 Que Acco Que Acco January 1, 2022 Viev Acco
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 4P
Related questions
Question
Transcribed Image Text:Ac
On January 1, 2020, Crane Corporation issued $8 million of 10-year, 7% convertible debentures at 106. Investment bankers believe
that the debenture would have sold at 103 without the conversion privilege. Interest is to be paid semi-annually on June 30 and
December 31. Each $1.000 debenture can be converted into 5 common shares of Crane after December 31, 2021. On January 1,
2022, $496,000 of debentures are converted into common shares, and on March 31, 2022, an additional $496,000 of debentures are
converted into common shares. Fair value of Crane's common shares is $106 and $111 per share on January 1, 2022, and March 31,
2022, respectively. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line
basis. Crane follows ASPE.
Ac
Qu
(a)
Qu
Acc
Make the necessary journal entries using the book value method. (Hint: March 31, 2022: Accrue interest on bonds to be converted as a
first entry.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round
intermediate percentage calculations to 3 decimal places, e.g. 1.246% and final answers to 0 decimal places, e.g. 5,275.)
Qu
Ace
Date
Account Titles and Explanation
Debit
Credit
Qu
Acce
December 31,
2021
Que
Acco
Que
Acco
January 1,
2022
Vieu
Acco
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!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
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.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
