Question
In: Accounting
On August 1, 2019, United Corporation issued $9.20 million of 8% bonds at 105. The bonds...
On August 1, 2019, United Corporation issued $9.20 million of 8%
bonds at 105. The bonds mature in 20 years. Each $1,000 bond was
issued with 20 detachable stock warrants, each of which entitled
the bondholder to purchase, for $42, one share of United $5 par
common stock. World Company purchased 10% of the bond issue. On
August 1, 2019, the market value per share for United stock was $48
and the market value of each warrant was $6. In March 2025, when
United common stock had a market price of $62 per share and the
unamortized premium balance was $220,000, World exercised the
warrants it held.
Required:
1. Prepare the journal entries on August 1, 2019,
to record (A) the issuance of the bonds by United and (B) the
investment by World.
2. Prepare the journal entries for both companies
in March 2025 to record the exercise of the warrants.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
On August 1, 2019, United Corporation issued $9.50 million of 6% bonds at 104. The bonds...
On August 1, 2019, United Corporation issued $9.50 million of 6%
bonds at 104. The bonds mature in 20 years. Each $1,000 bond was
issued with 20 detachable stock warrants, each of which entitled
the bondholder to purchase, for $45, one share of United $5 par
common stock. World Company purchased 20% of the bond issue. On
August 1, 2019, the market value per share for United stock was $51
and the market value of each warrant was $7. In...
On August 1, 2019, United Corporation issued $9.50 million of 6% bonds at 104. The bonds...
On August 1, 2019, United Corporation issued $9.50 million of 6%
bonds at 104. The bonds mature in 20 years. Each $1,000 bond was
issued with 20 detachable stock warrants, each of which entitled
the bondholder to purchase, for $45, one share of United $5 par
common stock. World Company purchased 20% of the bond issue. On
August 1, 2019, the market value per share for United stock was $51
and the market value of each warrant was $7. In...
On August 1, 2021, Limbaugh Communications issued $44 million of 12% nonconvertible bonds at 105. The...
On August 1, 2021, Limbaugh Communications issued $44 million of
12% nonconvertible bonds at 105. The bonds are due on July 31,
2041. Each $1,000 bond was issued with 25 detachable stock
warrants, each of which entitled the bondholder to purchase, for
$30, one share of Limbaugh Communications’ no par common stock.
Interstate Containers purchased 20% of the bond issue. On August 1,
2021, the market value of the common stock was $28 per share and
the market value of...
On August 1, 2018, Limbaugh Communications issued $22 million of 11% nonconvertible bonds at 105. The...
On August 1, 2018, Limbaugh Communications issued $22 million of
11% nonconvertible bonds at 105. The bonds are due on July 31,
2038. Each $1,000 bond was issued with 40 detachable stock
warrants, each of which entitled the bondholder to purchase, for
$50, one share of Limbaugh Communications’ no par common stock.
Interstate Containers purchased 20% of the bond issue. On August 1,
2018, the market value of the common stock was $48 per share and
the market value of...
On August 1, 2018, Limbaugh Communications issued $22 million of 11% nonconvertible bonds at 105. The...
On August 1, 2018, Limbaugh Communications issued $22 million of
11% nonconvertible bonds at 105. The bonds are due on July 31,
2038. Each $1,000 bond was issued with 40 detachable stock
warrants, each of which entitled the bondholder to purchase, for
$50, one share of Limbaugh Communications’ no par common stock.
Interstate Containers purchased 20% of the bond issue. On August 1,
2018, the market value of the common stock was $48 per share and
the market value of...
BU Curriculum Corporation issued $900,000 of 7% bonds on August 1, 2019, due on August 1,...
BU Curriculum
Corporation issued $900,000 of 7% bonds on August 1, 2019, due on
August 1, 2024. The interest is to be paid twice a year on February
1 and August 1. The bonds were sold to yield 9% effective annual
interest. BU Curriculum Corporation closes its books annually on
December 31.
(b) Prepare the journal entries for the following:
1.
August 1, 2019 bond issue
2. Adjusting entry for December 31, 2019 (adjusting entry should
cover 5 months)
3....
BU Curriculum Corporation issued $900,000 of 7% bonds on August 1, 2019, due on August 1,...
BU Curriculum
Corporation issued $900,000 of 7% bonds on August 1, 2019, due on
August 1, 2024. The interest is to be paid twice a year on February
1 and August 1. The bonds were sold to yield 9% effective annual
interest. BU Curriculum Corporation closes its books annually on
December 31.
(b) Prepare the journal entries for the following:
1.
August 1, 2019 bond issue
2. Adjusting entry for December 31, 2019 (adjusting entry should
cover 5 months)
3....
On August 1, 2021, Limbaugh Communications issued $40 million of 8% nonconvertible bonds at 102. The...
On August 1, 2021, Limbaugh Communications issued $40 million of
8% nonconvertible bonds at 102. The bonds are due on July 31, 2041.
Each $1,000 bond was issued with 20 detachable stock warrants, each
of which entitled the bondholder to purchase, for $60, one share of
Limbaugh Communications’ no par common stock. Interstate Containers
purchased 20% of the bond issue. On August 1, 2021, the market
value of the common stock was $58 per share and the market value of...
Zapzap Corporation issued $4,000,000 in five-year, 4% bonds on August 1, 2019. Interest is to be...
Zapzap Corporation issued $4,000,000 in five-year, 4% bonds on
August 1, 2019. Interest is to be paid semi-annually on Feb 1 and
August 1. The bonds were sold to yield 6% effective annual
interest. Pine Corporation has a calendar year-end and follows
IFRS. Instructions: Prepare the entries required for these bonds at
• December 31, 2019(year end) • February 1, 2020 • August 1, 2020
when the interest was paid, and the entire issue was retired early
for $4,350,000 plus...
Grove Corporation issued $2,400,000 of 8% bonds on October 1, 2019. The interest is to be...
Grove Corporation issued $2,400,000 of 8% bonds on October 1,
2019. The interest is to be paid twice a year on April 1 and
October 1. The bonds were sold to yield 7% effective annual
interest. Assume the proceeds at the time of issue were $2,514,672.
a. Prepare an amortization schedule for April 1 and October 1, 2020
using the effective-interest method. Round all amounts to the
nearest dollar. (5 points) b. Using the above information, record
the bond issue...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- C++: Write a program that produces truth tables for the following compound propositions. Write the header...
- 1. What is the historical role of investment bankers ? Has this role changed ? Why...
- How were the original Internet requirements met through its design? What are the two main requirements...
- discuss crowdfunding on platforms: What features of the services incorporate virality? What are some of the...
- A textbook of mass 2.08 kg rests on a frictionless, horizontal surface. A cord attached to...
- Describe a time when someone did not really listen to or understand a point you were...
- Enumerations Create an advanced enumeration to represent months (JANUARY – DECEMBER) called enuMonths Add internal properties...
ADVERTISEMENT