Question

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 had a market price of $55 per share and the unamortized discount balance was $30,000, 20% of the warrants were exercised.
Prepare the journal entry to record the issuance of the bonds.
Prepare the journal entry to record the exercise of the warrants.

Please explain the journal entry to record the exercise of the warrants.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Event Accounst Title Dr CR
1 Cash (6*102%) 6.12
Discount oN Bonds Payable $1.68
Bonds payable $6
Equity-Stock warrants (10*$3*(6 million/1000 bonds)) 1.8
(being bonds with warrants issued at discount)
2 Cash 3.6
Equity-Stock warrants 0.36
Common stock (.36+3.6) 3.96
(being stock warrants excersiced)
Explanation
Cash is calculated as ((6000000/1000)*10 warrants*$30*20%) 3.6
Equity-Stock warrants (1.8*20%)
If any doubt please comment
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
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. 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...
Problem 14-19A Convertible bonds; induced conversion; bonds with detachable warrants [LO 14-5] Bradley-Link’s December 31, 2018,...
Problem 14-19A Convertible bonds; induced conversion; bonds with detachable warrants [LO 14-5] Bradley-Link’s December 31, 2018, balance sheet included the following items: Long-Term Liabilities 9.0% convertible bonds, callable at 103 beginning in 2019, due 2021 (net of unamortized discount of $3) [note 8] 11.0% registered bonds callable at 106 beginning in 2025, due 2027 (net of unamortized discount of $1.5) [note 8] Shareholders’ Equity Equity—stock warrants Note 8: Bonds (in part) ($ in millions) $147 68.5 5 The 9.0% bonds...
On March 1, 2017, Atlas Corporation issued $1,000,000 of 8% nonconvertable bonds at 105, which are...
On March 1, 2017, Atlas Corporation issued $1,000,000 of 8% nonconvertable bonds at 105, which are due on February 28, 2037. In addition, each $1,000 bond was issued with 20 detachable warrants, each of which entitled the bondholder to purchase for $50 one share of Atlas common stock, par value $25. The bonds without the warrants would normally sell at 96. On March 1, 2017, the fair value of Atlas' common stock was $40 per share and the fair value...
. On August 1, 2010 Alpha Corporation issued $4,000,000, 10% convertible bonds at 115. The fair...
. On August 1, 2010 Alpha Corporation issued $4,000,000, 10% convertible bonds at 115. The fair value of similar bonds without the conversion feature was 110. On August 1, 2014, Alpha Corporation called its 10% convertible bonds for conversion. The bonds were converted into 160,000 common shares. On August 1, there was $350,000 of unamortized premium applicable to the bonds. At issuance of the bonds the market value of the common shares was $20 per share. The company records the...
on september 30,2017, Gargiola inc. Issued 4millions of 10 year, 8% convertible bonds for 4.6millions. The...
on september 30,2017, Gargiola inc. Issued 4millions of 10 year, 8% convertible bonds for 4.6millions. The bonds pay interest on march 31 and September 30 and mature on September 30, 2027. Each 1000$ bond can be converted into 80 no par value common shares. In addition, each bond include 20 detachable warrants. Each warrant can be used to purchase one common share at an exercise price of 15$. Immediately after the bond issuance, the warrants traded at 3$ each. Without...
Finks Co. has $2,500,000 (face value) of 8% convertible bonds outstanding which were issued at a...
Finks Co. has $2,500,000 (face value) of 8% convertible bonds outstanding which were issued at a premium. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on December 31. On December 31, 2020, the holders of 40% of the bonds exercised the conversion privilege. On that date, the market price of the common stock was $36. The total unamortized bond premium at the date of conversion (after the journal entry to...
Bradley-Link’s December 31, 2018, balance sheet included the following items: Long-Term Liabilities ($ in millions) 7.0%...
Bradley-Link’s December 31, 2018, balance sheet included the following items: Long-Term Liabilities ($ in millions) 7.0% convertible bonds, callable at 102 beginning in 2019, due 2022 (net of unamortized discount of $2) [note 8] $198 11.0% registered bonds callable at 105 beginning in 2028, due 2032 (net of unamortized discount of $1) [note 8] 65 Shareholders’ Equity 5 Equity—stock warrants Note 8: Bonds (in part) The 7.0% bonds were issued in 2005 at 98.0 to yield 10%. Interest is paid...
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.
On January 1, 2016, Cooper Corporation issued $800,000 of 12.5% bonds due January 1, 2023, at...
On January 1, 2016, Cooper Corporation issued $800,000 of 12.5% bonds due January 1, 2023, at 101. The bonds pay interest semiannually on June 30 and December 31. Each $1,000 bond carried 10 warrants which allowed the acquired to exchange 1 share of $10 par common stock for $50. Some time after the bonds were issued the bonds were quoted at 98 ex rights and each individual warrant was quoted at $5. Subsequently, on April 30, 2017, 2,000 rights were...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT