Question

1)39 $1000 bonds with a carrying value of $48600 are converted into 4000 shares of $5...

1)39 $1000 bonds with a carrying value of $48600 are converted into 4000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is

Bonds Payable 48600
     Common Stock 20000
     Paid-in Capital in Excess of Par 28600
Bonds Payable 48600
     Common Stock 36000
     Paid-in Capital in Excess of Par 12600
Bonds Payable 39000
Premium on Bonds Payable 9600
     Common Stock 20000
     Paid-in Capital in Excess of Par 28600
Bonds Payable 39000
Premium on Bonds Payable 9600
     Common Stock 39000
     Paid-in Capital in Excess of Par 9600

2)Coronado Corporation makes a short-term investment in 160 shares of Wildhorse Company’s common stock. The stock is purchased for $53 a share. The entry for the purchase is

Stock Investments 8480
      Cash 8480
Stock Investments 7987
      Cash 7987
Stock Investments 8000
      Cash 8000
Debt Investments 8480
      Cash 8480

3)

Coronado, Inc. has 3500 shares of 4%, $50 par value, cumulative preferred stock and 70000 shares of $1 par value common stock outstanding at December 31, 2019. The board of directors declared and paid a $2700 dividend in 2019. In 2020, $18900 of dividends are declared and paid. What are the dividends received by the preferred and common shareholders in 2020?

Preferred Common
$9450 $9450
$11300 $7600
$7600 $11300
$7000 $11900

4)

Marigold, Inc. has 11200 shares of 5%, $100 par value, noncumulative preferred stock and 224000 shares of $1 par value common stock outstanding at December 31, 2020. There were no dividends declared in 2019. The board of directors declares and pays a $64200 dividend in 2020. What is the amount of dividends received by the common stockholders in 2020?

$0

$8200

$64200

$56000

(you dont need to show work just answer them)

Homework Answers

Answer #1

When the carrying value of bond > the face value the bonds are issued at the premuim

as on date of conversion balance sheet would look like

Bonds Payable $39,000
Add: premium on bonds payale $9,600[48600-39000] $48,600

when bonds are converted bonds payable will be nil by debiting it and premium on bond payable will also be debited

common shares carries shares amount at par value

any amount higher than par value is credited to ppaid in capital in excess of par

common stock = 4000*$5=$20,000

Bonds Payable 39000
Premium on Bonds Payable 9600
     Common Stock 20000
     Paid-in Capital in Excess of Par 28,600 [$39,000+9600-20000]
Answer C)

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