Question

      (b) Present the entries required to record the transaction below. (3 marks)                   Gomez...

      (b) Present the entries required to record the transaction below.

           

      Gomez Company issues $5,000,000 of bonds with a coupon rate of 8%. To help the sale, detachable share warrants are issued at the rate of ten warrants for each $1,000 bond sold. It is estimated that the fair value of the bonds without the warrants is $4,935,000. The bonds with the warrants sold at 101.

     

Please show all workings

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Answer
Accounts Title Debit Credit Working
Cash $     5,050,000 (5000000*101%)
Discount on Bonds Payable $        253,000 5303000-5050000
      Bonds Payable $     5,000,000
      Paid in Capital Stock Warrants $        303,000 [(315000*5050000)/(4935000+315000)]
( To Record bond with warrants issued)
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
ABC Company Issues $5,000,000 of bonds with a stated rate of 8% (5,000 at $1,000 each)....
ABC Company Issues $5,000,000 of bonds with a stated rate of 8% (5,000 at $1,000 each). To help with the sale, detachable warrants are issues at the rate of ten (10) warrants for each $1,000 bond sold. It is estimated that the value of the bonds without the warrants is $4,935,000 and the value of the warrants is $315,000. The bonds with the warrants sold at 101. Using proportional method 1. Prepare the journal entry to record the sale of...
For each of the unrelated transactions described below, present the entries required to record each transaction....
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Indigo Corp. issued $21,600,000 par value 11% convertible bonds at 97. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Sweet Company issued $21,600,000 par value 11% bonds at 96. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling...
For each of the unrelated transactions described below, present the entries required to record each transaction....
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Buffalo Corp. issued $18,700,000 par value 9% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Carla Company issued $18,700,000 par value 9% 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 each of the unrelated transactions described below, present the entries required to record each transaction....
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Tamarisk Corp. issued $20,300,000 par value 11% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Vaughn Company issued $20,300,000 par value 11% 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 each of the unrelated transactions described below, present the entries required to record each transaction....
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Carla Corp. issued $19,300,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Sarasota Company issued $19,300,000 par value 10% 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 each of the unrelated transactions described below, present the entries required to record each transaction....
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Sarasota Corp. issued $18,800,000 par value 11% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Ivanhoe Company issued $18,800,000 par value 11% 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 each of the unrelated transactions described below, present the entries required to record each transaction....
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Metlock Corp. issued $21,300,000 par value 9% convertible bonds at 97. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Bonita Company issued $21,300,000 par value 9% bonds at 96. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling...
For each of the unrelated transactions described beliw present the entries rewuired to record each transaction....
For each of the unrelated transactions described beliw present the entries rewuired to record each transaction. 1. Pharoah Corp issued $21400000 par value 9% convertible bonds at 98. If the bonds had not been convertible the companys investment banker estimates they would have been sold at 95. 2. Novak Company issued $21400000 par value 9% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At time of issuance the warrants were selling for...
Safola inc. requires funding to build a new factory and has decided to raise the additional...
Safola inc. requires funding to build a new factory and has decided to raise the additional capital by issuing $850,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of 5 warrants for each $1,000 bond sold (in total 4,250 shares of warrants were issued with the bonds). The value of the bonds without...
For each of the unrelated transactions described below, present the entries required to record each transaction....
For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Crane Corp. issued $19,300,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. 2. Cheyenne Company issued $19,300,000 par value 10% 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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT