Question

1. The issuance of convertible bonds. 2. The conversion of convertible bonds. 3. The issuance of convertible preferred stock. 4. The conversion of convertible preferred stock. 5. The issuance of bonds with detachable stock warrants. 6. The issuance of bonds with nondetachable stock warrants. 7. The grant of employee stock options. 8. The exercise of employee stock options. 9. The expiration of employee stock options. 10. The reissuance of treasury shares at a price less than the cost of the shares. 11. The reissuance of treasury shares at a price greater than the cost of the shares. 12. The redemption of bonds at a price less than their carrying value. 13. The redemption of bonds at a price greater than their carrying value. 14. The amortization of a bond discount. 15. The amortization of a bond premium.

Required—For each transaction, indicate its effect on the financial statement totals displayed below by entering one of the following codes in the table cell: INC = Increase DEC = Decrease N = None

Transaction Total Assets Total Liabilities Total Stockholders’ Equity Net Income

Answer 1

Solution

Transaction	Total Assets	Total Liabilities	Total Stockholders' Equity	Net Income
1.The issuance of convertible bonds	INC	INC	N	N
2. The conversion of convertible bonds	N	DEC	INC	N
3. The issuance of convertible preferred stock	INC	N	INC	N
4. The conversion of convertible preferred stock	N	N	N	N
5. The issuance of bonds with detachable stock warrants	INC	INC	INC	DEC
6. The issuance of bonds with nondetachable stock warrants.	INC	INC	N	DEC
7. The grant of employee stock options	N	N	N	N
8. The exercise of employee stock options.	INC	N	INC	N
9. The expiration of employee stock options.	N	N	N	N
10. The reissuance of treasury shares at a price less than the cost of the shares.	INC	N	INC	N
11. The reissuance of treasury shares at a price greater than the cost of the shares.	INC	N	INC	N
12 The redemption of bonds at a price less than their carrying value	DEC	DEC	N	INC
13. The redemption of bonds at a price greater than their carrying value	DEC	DEC	N	DEC
14 The amortization of a bond discount	DEC	N	N	DEC
15. The amortization of a bond premium.	N	DEC	N	INC