Question
In: Accounting
On December 31, 20x0, a publicly accountable entity issued convertible bonds for total cash proceeds of...
On December 31, 20x0, a publicly accountable entity issued convertible bonds for total cash proceeds of $21,200,000.
The bonds mature on December 31, 20x20 and each bond is convertible at the option of the bondholders at any time.
Each $1,000 bond is convertible into 20 common shares. The face value of the bonds is $20,000,000 and pay an annual coupon of 3%. Coupon payment dates are June 30 and December 31. Bonds of similar risk would have yielded 2.8%.
Required –
a. Write the journal entry to record the bond issue on December 31, 20x0.
b. On July 2, 20x8, then the common stock was trading at $62, 40% of the bondholders converted their bonds into common shares. Write the journal entry to record the conversion of bonds on this date.
c. On Jan 2, 20x10, the entity repurchased 25% of the bond issue (25% of the original amount) at 102. Write the journal entry to record the repurchase.
d. Assume now that the bonds are mandatorily convertible into common shares on December 31, 20x20. Write the journal entries to record:
- issuance of the convertible bonds on December 31, 20x0 -
payment of interest on June 30, 20x1 -
payment of interest on December 31, 20x1
- all journal entries on December 31, 20x20
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Blossom Inc., a publicly accountable enterprise that reports in accordance with IFRS, issued convertible bonds for...
Blossom Inc., a publicly accountable enterprise that reports in
accordance with IFRS, issued convertible bonds for the first time
on January 1, 2017. The $1 million of six-year, 10% (payable
annually on December 31, starting December 31, 2017), convertible
bonds were issued at 107, yielding 7%. The bonds would have been
issued at 96 without a conversion feature, and yielding a higher
rate of return. The bonds are convertible at the investor’s
option.
The company’s bookkeeper recorded the bonds at...
The Magnus Corporation, a publicly accountable entity, had the following investments as at December 31, 20x2:...
The Magnus Corporation, a publicly accountable entity, had the
following investments as at
December 31, 20x2:
Company
Type
Classification
Original
Cost
Carrying
Value
Fair
Value
Will Corp. Shares FVPL $65,000 $61,000 $58,000
Simon Co. Shares FVPL 205,000 212,000 225,000
Craig Inc. Shares FVOCI 82,000 88,000 106,000
Frey Inc. Shares FVOCI 94,000 80,000 88,000
Blandin Co. Bonds FVOCI 210,106 210,106 210,106
The Blandin Co. bonds were purchased on December 31, 20x2. The
bonds have a face value of
$200,000, pay interest...
On October 31, 2016, Quesnell Corp. (QC), a publicly accountable entity, sold inventory to a customer...
On October 31, 2016, Quesnell Corp. (QC), a publicly accountable
entity, sold inventory to a customer in exchange for a $ 450,000,
three-year, 3% note receivable. QC’s incremental borrowing rate at
the inception of the note receivable was 4%, and the customer’s
incremental borrowing rate was 7%. QC’s original cost of the
inventory sold was $325,000.
QC collected the note in full on October 31, 2019. Interest was
received annually on October 31, and the first interest payment was
received...
On October 31, 2016, Quesnell Corp. (QC), a publicly accountable entity, sold inventory to a customer...
On October 31, 2016, Quesnell Corp. (QC), a publicly accountable
entity, sold inventory to a customer in exchange for a $ 450,000,
three-year, 3% note receivable. QC’s incremental borrowing rate at
the inception of the note receivable was 4%, and the customer’s
incremental borrowing rate was 7%. QC’s original cost of the
inventory sold was $325,000.
QC collected the note in full on October 31, 2019. Interest was
received annually on October 31, and the first interest payment was
received...
The following information is for a copyright owned by Bridgeport Corp., a publicly accountable entity, at...
The following information is for a copyright owned by Bridgeport
Corp., a publicly accountable entity, at December 31, 2020.
Bridgeport Corp. applies IFRS. Cost $4,304,000 Carrying amount
2,174,000 Expected future net cash flows (undiscounted) 2,043,000
Fair value 1,517,000 Assume that Bridgeport Corp. will continue to
use this copyright in the future. As at December 31, 2020, the
copyright is estimated to have a remaining useful life of 10 years.
The copyright’s value in use is $1,882,000 and its selling costs...
Convertible Bonds. Garr Co. issued $6,000,000 of 12%, 5-year convertible bonds on December 1, 2020 for...
Convertible Bonds. Garr Co. issued $6,000,000 of 12%, 5-year
convertible bonds on December 1, 2020 for $6,025,480 plus accrued
interest. The bonds were dated April 1, 2020 with interest payable
April 1 and October 1. Bond premium is amortized each interest
period on a straight-line basis. Garr Co. has a fiscal year end of
September 30.
On October 1, 2021, $3,000,000 of these bonds were converted
into 42,000 shares of $15 par common stock. Accrued interest was
paid in cash...
Problem 4 On December 31, 20x0, the Smith Corporation purchased bonds of another company. The bonds...
Problem 4
On December 31, 20x0, the Smith Corporation purchased bonds of
another company. The bonds had a face value of $1,000,000, mature
on December 31, 20x13, and pay a coupon rate of 3.6% semi-annually
on June 30 and Dec 31. The bonds were yielding 3% on the date of
purchase. Smith paid $7,300 in transaction costs.
On December 31, 20x1, the bonds are trading at 102.
On January 2, 20x2, the bonds are sold at 102.2 less $8,000 in...
The Timmons Corporation, a publicly accountable entity, exchanged an office building for a strip mall with...
The Timmons Corporation, a publicly accountable entity,
exchanged an office building for a strip
mall with an unrelated organization. Data on the two properties
are as follows:
Office Building Strip Mall
Original Cost $1,600,000 $1,300,000
Accumulated depreciation 1,100,000 750,000
Fair value 900,000 850,000
Required –
a) Prepare the journal entry to record the exchange on the books
of Timmons on the
assumption that the transaction has commercial substance.
b) Prepare the journal entry to record the exchange on the books...
Salt Company issued 6,400 of its $1,000 par value bonds for $1,460, providing total cash proceeds...
Salt Company issued 6,400 of its $1,000 par value bonds for
$1,460, providing total cash proceeds of $ 9,344,000. The market
price of Salt's common shares on the date it issued the bonds is $
23 per share. It sold the bonds with 352,000 detachable warrants to
acquire 352,000 shares of the company's $ 2 par value common stock
for $ 23 per share. That is, each bond carries 55 warrants x 6,400
bonds = 352,000 shares. Salt has existing...
Redmond Company issued 4000 of its $1000 par value bonds for $1500, providing total cash proceeds...
Redmond Company issued 4000 of its $1000 par value bonds for
$1500, providing total cash proceeds of $6,000,000. There are no
bond issue costs. The market price of Redmond's common shares on
the date that the bonds were issued was $55 per share. The bonds
were sold with 140,000 warrants to acquire 140,000 shares of the
company's $5 par value common stock for $65 per share. That is,
each bond carries 35 warrants. Redmond has existing bonds
outstanding that currently...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.
- Current Market Mix of Netflix, as detail as possible, please.
- This is all one question, thank you so much in advance! You must evaluate a proposal...
- X Company is considering the purchase of a new processor that costs $200,000. Shipping and setup...
- There are a large number of tasks involved in information technology and programming, and many of...
ADVERTISEMENT