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Testbank Multiple Choice Question 55 On May 1, 2021, Marigold Corp. issued $1560000 of 6% bonds...

Testbank Multiple Choice Question 55

On May 1, 2021, Marigold Corp. issued $1560000 of 6% bonds at 103, which are due on April 30, 2031. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Marigold’s common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 95. On May 1, 2021, the fair value of Marigold’s common stock was $35 per share and of the warrants was $2.

On May 1, 2021, Marigold should credit Paid-in Capital from Stock Warrants for

$108121.
$60721.
$62400.
$64921.

Testbank Multiple Choice Question 85

What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?

Increase and no effect
Increase and decrease
Decrease and no effect
Decrease and increase
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Homework Answers

Answer #1

1..

Number of bonds = $1560000/1000=1560 .

Number of detachable stock = 20.

Value of warrants = $2.

Amt credited = 1560*20*$2 = $62400
Hence option 3 is correct

2...

Treasury shares are the company's own shares which the company has bought from the shareholders.

When a company acquires treasury stock, number of outstanding shares decreases and thus stockholders equity decreases/

Due to decrease in the number of outstanding shares, earning per share increase, since to calculate earning per share, outstanding number of share are considered.

Correct option is D

Decrease and increase
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