Question

In: Accounting

On April 1, 2018, Windel Corporation issued bonds with detachable warrants. Information related to these bonds...

On April 1, 2018, Windel Corporation issued bonds with detachable warrants.

Information related to these bonds is shown below:

Face value of bonds $325,000

Stated rate of interest 8%

Bonds issued at 106%

Each $1,000 bond was sold with 20 detachable warrants

Each warrant allowed the investor to purchase one share of common stock for $16

The par value of the common stock is $4.00

On April 1, 2018 the market values were:

Common stock $12

Warrants $7

In February 2023, some of the warrants were exercised. The percentage of warrants exercised was 20%

Bond #2: On January 1, 2016, Windel sold the following bonds:

Maturity value $850,000

Stated rate of interest 9%

Effective rate of interest 8%

Interest is paid each December 31

Maturity date January 1, 2021

On December 31, 2018, Windel redeemed (called) some of the bonds:

Call premium 105%

Percentage of bonds redeemed 40%

Required:

a. With respect to Bond #2:

1. Prepare an amortization schedule for the bonds.

Solutions

Expert Solution

Amortization schedule for the bond B

ekkarill92 answered 1 month ago

Next > < Previous

Related Solutions

(Issuance of Bonds with Detachable Warrants) On September 1, 2014, Universal Coat Company sold at 104...

(Issuance of Bonds with Detachable Warrants) On September 1, 2014, Universal Coat Company sold at 104 (plus accrued interest) 3,000 of its 8%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $15 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. No market value can be determined for the Universal Coat...

On April 1, 2018, Austin Corporation issued $300,000 of 10% bonds at 105. Each $1,000 bond...

On April 1, 2018, Austin Corporation issued $300,000 of 10% bonds at 105. Each $1,000 bond was sold with 25 detachable stock warrants, each permitting the investor to purchase one share of common stock for $17. On that date, the market value of the common stock was $15 per share and the market value of each warrant was $2. Austin should record what amount of the proceeds from the bond issue as an increase in liabilities? clear steps and formulas...

Monty Corporation issued 1,800 $1,000 bonds at 103. Each bond was issued with one detachable stock...

Monty Corporation issued 1,800 $1,000 bonds at 103. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 99, and the warrants had a market price of $33. Use the proportional method to record the issuance of the bonds and warrants. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for...

1.Xonic Corporation issued $8 million of 10-year, 12 percent bonds on April 1, 2018, at 112.5...

1.Xonic Corporation issued $8 million of 10-year, 12 percent bonds on April 1, 2018, at 112.5 to yield 10 percent. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2028. Xonic’s fiscal year ends on March 31. What is the interest expense for the year ended March 31, 2019? Please round your answer to the nearest dollar. 2.Xonic Corporation issued $8 million of 10-year, 12...

Xonic Corporation issued $7.5 million of 20-year, 8 percent bonds on April 1, 2018, at 102....

Xonic Corporation issued $7.5 million of 20-year, 8 percent bonds on April 1, 2018, at 102. Interest is due on March 31 and September 30 of each year, and all of the bonds in the issue mature on March 31, 2038. Xonic’s fiscal year ends on December 31. 1. Record the bond interest and amortize bond premium. 2. Record the final interest payment and amortize bond premium. 3. Record the retirement of the bonds.

Xonic Corporation issued $7.5 million of 20-year, 8 percent bonds on April 1, 2018, at 102....

On April 1, 2018, Western Communications, Inc., issued 12% bonds, dated March 1, 2018, with face...

On April 1, 2018, Western Communications, Inc., issued 12% bonds, dated March 1, 2018, with face amount of $32 million. The bonds sold for $31.3 million and mature on February 28, 2021. Interest is paid semiannually on August 31 and February 28. Stillworth Corporation acquired $32,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31, and both firms use the straight-line method. Required: 1. Prepare the journal entries to record (a) issuance of...

Martino Motor Corporation issued $200,000 of 10% bonds for 216,221 The bonds were dated April 1,...

Martino Motor Corporation issued $200,000 of 10% bonds for 216,221 The bonds were dated April 1, 2018, are due March 31, 2023 (5years), and pay interest semi-annually on September 30 and March 31. The market yield for bonds of similar risk and maturity was 8%. Bats fiscal year end is December 31. 1. Prepare a bond amortization schedule using the straight-line method 2. Prepare a bond amortization schedule using the effective interest method 3. Prepare the journal entries for (a)...

On March 1, 2018, Greenway Corporation issued 5% bonds dated January 1, 2018 with a par...

On March 1, 2018, Greenway Corporation issued 5% bonds dated January 1, 2018 with a par value of $1,000,000. The bonds were sold for the present value of the bonds on March 1, 2018 plus two-month accrued interest. The bonds mature on December 31, 2023. Interest is paid semiannually on Jun 30 and December 31. Greenway's fiscal year ends on December 31 each year. The effective interest rate is 7%. Required: a. Determine the present value the bonds on...

On February 1, 2018, Fox Corporation issued 7% bonds dated February 1, 2018, with a face...

On February 1, 2018, Fox Corporation issued 7% bonds dated February 1, 2018, with a face amount of $120,000. The bonds sold for $108,125 and mature in 20 years. The effective interest rate for these bonds was 8%. Interest is paid semiannually on July 31 and January 31. Fox's fiscal year is the calendar year. Fox uses the straight-line method of amortization. Required: 1. Prepare the journal entry to record the bond issuance on February 1, 2018. 2. Prepare the...

Subjects