Journal entries | |||||
Date | Particulars | Debit | Credit | ||
01-01-2019 | Cash (50000000*1.02) | $ 5,10,00,000.00 | |||
Premium on bonds payable | $ 10,00,000.00 | ||||
Bond payable | $ 5,00,00,000.00 | ||||
(to record bond issuance) | |||||
01-01-2020 | Bond payable (50000000*50%) | $ 2,50,00,000.00 | |||
premium on bond payable | $ 3,50,000.00 | ||||
loss on bond conversion | $ 46,50,000.00 | ||||
additional paid in capital common stock(25000*15*79) | $ 2,96,25,000.00 | ||||
Common stock (25000*15*1) | $ 3,75,000.00 | ||||
(to bonds converted into stock) | |||||
Calculation of premium on bonds payable | |||||
premium on bond conversion (1000000*50%) | $ 5,00,000.00 | ||||
premium amortized (500000*30%) | $ 1,50,000.00 | ||||
Unamortized premium | $ 3,50,000.00 |
Western World Inc. issues $50,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares...
Western World Inc. issues $40,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares of the company’s $1 par common stock. The bonds are issued at 103 on January 1, 2020 and pay interest in Jan and July and mature on January 1, 2025. On July 1, 2021, 25% of the bonds are converted when the stock price is $80 per share and 30% of the bond premium has been amortized. Record the following transactions: Bond as issuance Conversion of $40,000,000...
Question 3 Western World Inc. issues $30,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares of the company’s $1 par common stock. The bonds are issued at 103 on January 1, 2020 and pay interest in Jan and July and mature on January 1, 2025. On July 1, 2021, 40% of the bonds are converted when the stock price is $80 per share and 30% of the bond premium has been amortized. Record the following transactions: Bond...
Stonewall Corporation issued $40,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1, 2020. Required a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion,...
Dadayeva Inc. has $5 million of 6% convertible bonds outstanding. Each $1,000 bond is convertible into 50 no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2020, the holders of $1,250,000 of these bonds exercised the conversion privilege. On that date, the market price of the bonds was 110, the market price of the common shares was $40, the carrying value of the common shares was $20, and the Contributed Surplus—Conversion...
Carla Vista Inc. has $2 million of 7% convertible bonds outstanding. Each $1,000 bond is convertible into 20 no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2020, the holders of $640,000 of these bonds exercised the conversion privilege. On that date, the market price of the bonds was 112, the market price of the common shares was $59, the carrying value of the common shares was $30, and the Contributed...
Vaughn Manufacturing has $3890000 of 7% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2021, the holders of $1280000 bonds exercised the conversion privilege. On that date the market price of the bonds was 105 and the market price of the common stock was $37. The total unamortized bond premium at the date of conversion was $288000. Vaughn...
1-Suppose a firm issues a 1,000 Convertible Preference Shares for with a par value of $100 each. Each preference share is convertible into 5 Ordinary Shares with a par value of $5. The credit entry to “Share Premium – Conversion Equity” on the date of issue was for $200,000. Assume that the maturity date of the Convertible Shares has now arrived and the Convertible Preference Shares will be converted into Ordinary Shares. The Debit Entry to the “Share Premium –...
Chips Inc. issued $2,500,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1 and Chips uses effective interest amortization. On the date of issuance, the market rate of interest was 14%. The bonds are convertible after one year into 8 shares of Chips Inc.'s $100 par value common stock for each $1,000 of bonds. On Jan 1, 2022, $250,000 of bonds were turned in for conversion into...
On February 1, 2011, Woft Inc. issued 10% convertible bonds dated February 1, 2011, with a face amount of $200,000. The bonds sold for $239,588 and mature in 20 years. Each $1,000 bond is convertible into 60 shares of Wolf's $1 par value common stock. The effective interest rate for these bonds was 8%. Interest is paid semiannually on July 31 and January 31. Wolf's fiscal year is the calendar year. Wolf uses the effective interest method of amortization. 1....
On January 1, 2012, Slug Corporation issued $6 million of 8%, 10-year convertible bonds at 102.The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40shares of $1 par common stock. Fuzz Company purchased 20% of the issue as an investment.On July 1, 2016, Fuzz converted all of its bonds into common stock of Slug. The market price per share for Slug was $32 at the time of the conversion. Both companies use the...