Question

Mark Labs. Issued 100 bonds, $100 par, each with a detachable stock warrants. Each warrant maybe...

Mark Labs. Issued 100 bonds, $100 par, each with a detachable stock warrants. Each warrant

maybe exercised to purchase 1 share of $100 par common stock. THE TOTAL SELLING

PRICE IS THE PAR OF $10,000. At the time of the sale, the market value of the bonds (without

the warrants) is 102, while the market value of each warrants is $30.

REQUIRED: Allocate the $10,000 between the Bonds and the Warrants

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

We will allocate $10000 on the basis of market value of bonds and warrants

Particulars Rate Number Amount Basis Basis in %age Allocation of $10000
Market Value of bonds 102 100 10200 102/132 0.7727 7727.272727
Market Value of warrant 30 100 3000 30/132 0.2273 2272.727273
Total 13200 1.0000 10000

I have explained everything step by step

Go through it once and everything will be cleared.

Hope you understand the concept

Please give positive feedback by giving thumsup

Thankyou

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Anteater Company issued 100 bonds, each with a face amount of $1,000, with detachable stock...
1. Anteater Company issued 100 bonds, each with a face amount of $1,000, with detachable stock warrants at 101. Each warrant entitled its holder to acquire one share of $100 par common stock for $120 per share. Through discussion with investment bankers, it is determined that the bonds would sell for 97 without the warrants. The market value of each warrant is $50. Instructions: a. Record the issuance of the bonds. b. Record the subsequent exercise of all of the...
Anteater Company issued 100 bonds, each with a face amount of $1,000, with nondetachable stock warrants...
Anteater Company issued 100 bonds, each with a face amount of $1,000, with nondetachable stock warrants at 101. Each warrant entitled its holder to acquire one share of $100 par common stock for $120 per share. Through discussion with investment bankers, it is determined that the bonds would sell for 97 without the warrants. The market value of each warrant is $50. 1.Record the journal entry for the issuance of the bonds.
A Company issued 2,000, $100 bonds with the warrants attached for $205,000. Detachable 2- year warrants...
A Company issued 2,000, $100 bonds with the warrants attached for $205,000. Detachable 2- year warrants to buy one share of common stock were attached. The bonds were quoted at 90 without the warrants. The market price of the warrants without the bonds was $10. What amount should be allocated to the warrants? a. $20,000 b. $20,500 c. $24,000 d. $0 Refer back to the prior problem. Assume the warrants are not detachable. What amount, if any, of the proceeds...
Bonds with Detachable Warrants. On June 30, 2016, Cano Corporation issued $8 million of 4% bonds...
Bonds with Detachable Warrants. On June 30, 2016, Cano Corporation issued $8 million of 4% bonds for $8,200,000. Each $1,000 bond was issued with 15 detachable stock warrants, each of which entitled the bondholder to purchase one share of Cano’s no-par common stock for $45. Immediately after the issuance of the bonds, the warrants were separately trading for $3 each. Prepare the journal entry to record the issuance of these bonds. For 2 points extra credit, calculate the effective interest...
1.   On August 1, 2022, United Corporation issued $6 million of 8% convertible bonds at 102....
1.   On August 1, 2022, United Corporation issued $6 million of 8% convertible bonds at 102. The bonds mature in 20 years. Each $1,000 bond was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $30, one share of United no par common stock. On August 1, 2022, the market value per share for United stock was $33 and the market value of each warrant was $3. In March 2028, when United common stock...
Bonds with Detachable Warrants Langdon & Co. issues bonds with a face value of $50,000 for...
Bonds with Detachable Warrants Langdon & Co. issues bonds with a face value of $50,000 for $51,000. Each $1,000 bond carries 10 warrants, and each warrant allows the holder to acquire one share of $1 par common stock for $40 per share. Immediately after the issuance, the bonds are quoted at 99 ex rights and the warrants are quoted at $5 each. Calculate the value to be assigned to the bonds and to the warrants. Round your answers to two...
Cheyenne Corporation issued 1,700 $1,000 bonds at 103. Each bond was issued with one detachable stock...
Cheyenne Corporation issued 1,700 $1,000 bonds at 103. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. Use the incremental method to record the issuance of the bonds and warrants. (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...
Bengts Inc offered detachable 10-year warrants to buy six shares of common stock (par value $1)...
Bengts Inc offered detachable 10-year warrants to buy six shares of common stock (par value $1) at $30 (at a time when the stock was selling for $35)The price paid for 500,$1,000 bonds with the warrants attached was $660,000. The market price of the Bengts bonds without the warrants was $540,000 and the market price of the warrants without the bonds was $90,000. What amount should be allocated to the bond premium or discount?
On November 3, 2020, AOC issued $400,000 of 8% bonds at 102. Attached to each $1,000...
On November 3, 2020, AOC issued $400,000 of 8% bonds at 102. Attached to each $1,000 bond are 10 detachable stock warrants. On the issuance date, the bonds without the warrants sell in the market at 99 per bond, and the fair value of the warrants is $5.21 per warrant. Use the appropriate method to allocate the proceeds from the bond issuance, and prepare the journal entry to record the issuance. SHOW THE WORK
On July 1, 2018, Jack Company issued for $8400000 a total of 80,000 shares of $100...
On July 1, 2018, Jack Company issued for $8400000 a total of 80,000 shares of $100 par value, 7% noncumulative preferred stock along with one detachable warrant for each share issued. Each share warrant contains right to purchase one share of Jack 10 par value common stock for $15 per share. The stock without the warrants would normally sell for 8200,000. The market price of the rights on July 1 2018 was 2.50 per right. On October 31, 2018 when...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT