Question

For each of the unrelated transactions described below, present the entry(ies) required.

Crane Company issued $8,000,000 par value 5% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $2. (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.)

Cheyenne Corp. issued $8,000,000 par value 10% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 94. (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.)

Suppose Google, Inc. called its convertible debt in 2017. Assume the following related to the transaction. The 8%, $3,600,000 par value bonds were converted into 450,000 shares of $1 par value common stock on July 1, 2017. On July 1, there was $26,000 of unamortized discount applicable to the bonds, and the company paid an additional $34,000 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.)

Answer 1