Question

Bradley-Link's December 31, 2021, balance sheet included the following items: ($ in millions) $147 Long-Term Liabilities 9.0% convertible bonds, callable at 103 beginning in 2022, due 2025 (net of unamortized discount of $3) [note 8] 9.8% registered bonds callable at 106 beginning in 2031, due 2035 (net of unamortized discount of $1) [note 8] Shareholders' Equity Equity-stock warrants Note 8: Bonds (in part) The 9.0% bonds were issued in 2008 at 96.0 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of the Company's no par common stock. The 9.8% bonds were issued in 2012 at 104 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 40 detachable stock warrants, each of which entitles the holder to purchase one share of the Company's no par common stock for $20, beginning 2022. On January 3, 2022, when Bradley-Link's common stock had a market price of $27 per share, Bradley-Link called the convertible bonds to force conversion. 90% were converted; the remainder were acquired at the call price. When the common stock price reached an all-time high of $32 in December of 2022, 40% of the warrants were exercised. Required: 1. Prepare the journal entries that were recorded when each of the two bond issues was originally sold in 2008 and 2012. 2. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2022 and the retirement of the remainder. 3. Assume Bradley-Link induced conversion by offering $150 cash for each bond converted. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2022. 4. Assume Bradley-Link induced conversion by modifying the conversion ratio to exchange 45 shares for each bond rather than the 40 shares provided in the contract. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2022. 5. Prepare the journal entry to record the exercise of the warrants in December 2022.

Answer 1

gnswer page :o Required 144 frent particulats Debit c) Leredit.com Cash alc discount on bonds payable ale ou 6 (194+6) To convertible bonds payable 150 convertible bonds - 2005 issue cashf.96.1.3.2.150 million) - $144 L cash ale Dalt 12.8 Discount on bonds payable als on To convertible bonds payable.... To equity - stock. warrants Boods with warrant - 2009 issue cash 1104.1.x. € 70 million) = $ 72.8 Required Event particulars. Debit.co). Credit (8) til.convertible bands payablel 2017.x $150 mil). 135 discount on bands payable (90:1.x2 mil). convertible bonds payable. (10'%, X$150 mil) L. 15 Lloss on early extinguishment discount on bonds payable (10.x2mill. cash (1034.x104. x 150 million) 0165 15,45

Required page :02 particulars osamine e bebit & Gledits convertible bonds payable (904.x$.150 million) 35 conversion expense ( 20 % X150, bao bonds x 1150) | 20.251 discount on bandı payable. Colex$_million). Common stock 133.2. cash (90+, X150,000 bonds * $150) 20.35 Requered @ Event particulars Debit credit & loovenlible bonds payable (9011.x 150 million) 135 convension Expense (90.1.*(150,000x (45-40)share) 1823 discount on bonds payable (901x2.million). Common stock 135 +18.23)-1.8 Required ® X 27. 1512 Event Giedit & particulars cash (4011. 8.40.000 X 40 wargantix 20). Equity-stöck warrants (404,x_{ million) To common stock (29.449) Debit 22.4. 24.4