What i have down is correct so far but cant find the numbers and that last accou
ID: 2415428 • Letter: W
Question
What i have down is correct so far but cant find the numbers and that last account for the journal entry. Also please show work. Thank you.
Exercise 16-1
No.
Account Titles and Explanation
Debit
Credit
1.
(To record bond issue)
(To record bond issue costs)
2.
3.
What i have down is correct so far but cant find the numbers and that last account for the journal entry. Also please show work. Thank you.
Exercise 16-1
Your answer is partially correct. Try again. For each of the unrelated transactions described below, present the entries required to record each transaction.1. Grand Corp. issued $20,195,000 par value 11% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. Expenses of issuing the bonds were $79,200. 2. Hoosier Company issued $20,195,000 par value 11% bonds at 97. One detachable stock warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5. 3. Suppose Sepracor, Inc. called its convertible debt in 2014. Assume the following related to the transaction: The 12%, $10,485,000 par value bonds were converted into 1,048,500 shares of $1 par value common stock on July 1, 2014. On July 1, there was $57,700 of unamortized discount applicable to the bonds, and the company paid an additional $77,400 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.
(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 the amounts.)
No.
Account Titles and Explanation
Debit
Credit
1.
Cash
19791100
Discount on Bonds Payable
403900
Bonds Payable
20195000
(To record bond issue)
Unamortized Bond Issue Costs
cash
(To record bond issue costs)
2.
Cash
Discount on Bonds Payable
Paid-in Capital-Stock Warrants
Bonds Payable
3.
Bonds Payable
Paid-in Capital in Excess of Par - Common Stock
Discount on Bonds Payable
Common Stock
Paid-in Capital in Excess of Par - Common Stock
Cash
Explanation / Answer
Answer:
1. Cash ($20,000,000 X .99)..................................................... 19,791,100
Discount on Bonds Payable................................................. 403,900
Bonds Payable............................................................. 20,195,000
Unamortized Bond Issue Costs........................................... 79200
Cash............................................................................. 79200
2.
Cash 19,589,150
Discount on Bonds Payable................................................. 1,615,600
Bonds Payable............................................................. 20,195,000
Paid-in Capital—Stock Warrants............................. 100,9750
3.
Debt Conversion Expense............................................................. 77,400
Bonds Payable...................................................................... 10,485,000
Discount on Bonds Payable........................................ 57,700
Common Stock............................................................ 1,048,500
Paid-in Capital in Excess of Par................................ 9,378,800*
Cash............................................................................. 77,400
*[($10,485,000 – $57,700) – $1,048,500]
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