Homework Answers
1.
Bonds issue price:
= Bond price + Premium
= $200,000 + $5,000
= $205,000
Premium amortized:
= Premium - Unamortized premium
= $10,000 - $4,000
= $6,000
Current book value of bonds:
= Bonds issue price - Premium amortized
= $205,000 - $6,000
= $199,000
Paid-in capital in excess of par:
= Current book value of bonds - Convertible shares amount
= $199,000 - (4,000 shares × $20 par value)
= $199,000 - $80,000
= $119,000
Convertible Bonds A/C Dr 205000
To Share Premium A/c 6000
To Paid up share capital A/c 80000 (par value)
To Additional paid up share capital 119000
2.
Preferred Stock A/c Dr 9000000
Paid-in Capital in Excess of Par - Preferred A/c 450000
To Common Stock 6750000
TO Paid-in Capital in Excess of Par - Common A/c 2700000
Paid-in Capital in Excess of Par - Common
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Please show all supporting computations. Points will be deducted if you do not show your work....
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In 2017, Swifty Corporation, issued for $103 per share, 92500
shares of $100 par value convertible preferred stock. One share of
preferred stock can be converted into three shares of Swifty's $20
par value common stock at the option of the preferred stockholder.
In August 2018, all of the preferred stock was converted into
common stock. The market value of the common stock at the date of
the conversion was $25 per share. What total amount should be
credited to...
In 2017, Sheffield Corp., issued for $102 per share, 97000
shares of $100 par value convertible preferred stock. One share of
preferred stock can be converted into three shares of Sheffield's
$20 par value common stock at the option of the preferred
stockholder. In August 2018, all of the preferred stock was
converted into common stock. The market value of the common stock
at the date of the conversion was $25 per share. What total amount
should be credited to...
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