Homework Answers
Answer-1:
The liability portion of the convertible bonds is the present value of the future cash flows, calculated by discounting the future cash flows of the bonds (interest and principal) at the market rate of interest with the assumption that no conversion option is available.
The liability portion is calculated as belows:
The value of the equity portion will be the difference between the total proceeds received from the bonds and the present value (liability portion).
Equity Portion = Total Proceeds – Present Value of Bond = $2,100,000 - $2,044,872 = $55,128
Answer-2:
Answer-3:
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Blossom Corporation issues 2,100 convertible bonds at January 1, 2019. The bonds have a 3-year life,...
Bramble Corporation issues 2,100 convertible bonds at January 1, 2019. The bonds have a 3-year life,...
Bramble Corporation issues 2,100 convertible bonds at January 1,
2019. The bonds have a 3-year life, and are issued at par with a
face value of $1,000 per bond, giving total proceeds of $2,100,000.
Interest is payable annually at 6%. Each bond is convertible into
250 ordinary shares (par value of $1). When the bonds are issued,
the market rate of interest for similar debt without the conversion
option is 8%.
a. Compute the liability and equity component of the...
On January 1, 2019, Wildhorse Co. issued $2,360,000 face value, 7%, 10-year bonds at $2,201,642. This...
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effective-interest method to amortize bond premium or discount. The
bonds pay annual interest on January 1.
Prepare the journal entry to record the issuance of the bonds
on January 1, 2019. (Credit account titles are
automatically indented when amount is entered. Do not indent
manually.)
Date
Account Titles and Explanation...
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Kingbird, Inc. issued $480,000, 596, 20-year bonds on January 1, 2019, at 101. Interest is payable annually on January 1. Kingbird uses straight-line amortization for bond premium or discount. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Prepare the journal entry to record the accrual of interest and the premium amortization on December 31,2019....
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Blossom Company issues $1,000,000, 10-year, 10% bonds at 95, with interest payable each January 1. Prepare...
Blossom Company issues $1,000,000, 10-year, 10% bonds at 95, with interest payable each January 1. Prepare the journal entry to record the sale of these bonds on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Assuming instead that the above bonds sold for 108, prepare the journal entry to record the sale of these bonds on January 1, 2020. (Credit account titles...
Please I need help with this!! Problem 10-12A On January 1, 2019, Sunland Company issued $3,980,000...
Please I need help with this!!
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On January 1, 2018, Irik Corporation issued $2,550,000 face value, 7%, 10-year bonds at $2.378,893. This...
On January 1, 2018, Irik Corporation issued $2,550,000 face value, 7%, 10-year bonds at $2.378,893. This price resulted in an effective- interest rate of 8% on the bonds. The bonds pay annual interest, each January 1. Prepare the journal entry to record the issue of the bonds on January 1, 2018. (Credit account titles are automatically Indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Jan. 1, 2018 Prepare an amortization table through...
Garr Co. issued $4,194,000 of 12%, 5-year convertible bonds on December 1, 2017 for $4,211,720 plus...
Garr Co. issued $4,194,000 of 12%, 5-year convertible bonds on December 1, 2017 for $4,211,720 plus accrued interest. The bonds were dated April 1, 2017 with interest payable April 1 and October 1. Bond premium is amortized each interest period on a straight-line basis. Garr Co. has a fiscal year end of September 30. On October 1, 2018, $2,097,000 of these bonds were converted into 28,000 shares of $15 par common stock. Accrued interest was paid in cash at the...
On January 1, 2020, Oriole Corporation issued $1,550,000 face value, 6%, 10-year bonds at $1,441,134. This...
On January 1, 2020, Oriole Corporation issued $1,550,000 face value, 6%, 10-year bonds at $1,441,134. This price resulted in an effective-interest rate of 7% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1. Prepare the journal entry to record the issuance of the bonds on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation...
Problem 10-12A On January 1, 2019, Windsor, Inc. issued $2,280,000 face value, 8%, 10-year bonds at...
Problem 10-12A On January 1, 2019, Windsor, Inc. issued $2,280,000 face value, 8%, 10-year bonds at $2,133,677. This price resulted in an effective-interest rate of 9% on the bonds. Windsor uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1. Your answer is partially correct. Try again. Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered....
Bramble Corporation issues 2,100 convertible bonds at January 1,
2019. The bonds have a 3-year life, and are issued at par with a
face value of $1,000 per bond, giving total proceeds of $2,100,000.
Interest is payable annually at 6%. Each bond is convertible into
250 ordinary shares (par value of $1). When the bonds are issued,
the market rate of interest for similar debt without the conversion
option is 8%.
a. Compute the liability and equity component of the...
On January 1, 2019, Wildhorse Co. issued $2,360,000 face value,
7%, 10-year bonds at $2,201,642. This price resulted in an
effective-interest rate of 8% on the bonds. Wildhorse uses the
effective-interest method to amortize bond premium or discount. The
bonds pay annual interest on January 1.
Prepare the journal entry to record the issuance of the bonds
on January 1, 2019. (Credit account titles are
automatically indented when amount is entered. Do not indent
manually.)
Date
Account Titles and Explanation...
Kingbird, Inc. issued $480,000, 596, 20-year bonds on January 1, 2019, at 101. Interest is payable annually on January 1. Kingbird uses straight-line amortization for bond premium or discount. Prepare the journal entry to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Prepare the journal entry to record the accrual of interest and the premium amortization on December 31,2019....
Blossom Company issues $1,000,000, 10-year, 10% bonds at 95, with interest payable each January 1. Prepare the journal entry to record the sale of these bonds on January 1, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1 Assuming instead that the above bonds sold for 108, prepare the journal entry to record the sale of these bonds on January 1, 2020. (Credit account titles...
Please I need help with this!!
Problem 10-12A On January 1, 2019, Sunland Company issued $3,980,000 face value, 7%, 10-year bonds at $3,712,939. This price resulted in an effective-interest rate of 8% on the bonds. Sunland uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1. Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered. Do...
On January 1, 2018, Irik Corporation issued $2,550,000 face value, 7%, 10-year bonds at $2.378,893. This price resulted in an effective- interest rate of 8% on the bonds. The bonds pay annual interest, each January 1. Prepare the journal entry to record the issue of the bonds on January 1, 2018. (Credit account titles are automatically Indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Jan. 1, 2018 Prepare an amortization table through...
Problem 10-12A On January 1, 2019, Windsor, Inc. issued $2,280,000 face value, 8%, 10-year bonds at $2,133,677. This price resulted in an effective-interest rate of 9% on the bonds. Windsor uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1. Your answer is partially correct. Try again. Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Credit account titles are automatically indented when amount is entered....
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