139. On January 1st, 20x12, ABC Inc. agrees to a futurescontract to buy 1,000 shares of DEF Inc. for $20 per share in60 days. The current value of the shares on January 1, 20x12is $22 per share.The broker requires a 20% margin payment. The fair value ofthe shares is $24 per share on January 31st, 20x12 and $18 pershare on February 29th, 20x12.Required: Prepare all relevant journal entries.

JOURNAL ENTRIES OF ABC Inc. January 1st, 20x12 Derivative Financial Asset A/c...Dr. $4000…

Answered: 139. On January 1st, 20x12, ABC Inc.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Arco, Inc. issued $300,000 of 4%, 10-year convertible bonds at par on July 1, 2022. Each bond has a par value of $1000. The bonds include the option for bondholders to convert each bond into 50 $1 par value shares of common stock beginning two years after the date of issue. The market price of the stock at the time of issue is $25 per share and the beneficial conversion option is valued at $75,000. On July 2, 2024, when the market price of the stock is $35 and the balance in the Discount account is $66,000, all of the bondholders convert the bonds. What is the proper entry to record the conversion of the bonds? Group of answer choices Date Account Debit Credit July 2, 2024 Bonds Payable 300,000 Discount on Bonds Payable 75,000 Common Stock, $1 par, 15,000 shares 300,000 Add. Paid-in Capital—Bene. Conv. Option 75,000 Date Account Debit Credit July 2, 2024 Bonds Payable 300,000 Add. Paid-in Capital—Bene. Conv. Option 75,000 Discount…
The company expects to invest approximately $1 million in three months in corporate bonds. The current rate of interest is 5.10%. To hedge the position, the company wishes to use 3 year Treasury bond futures contracts trading at 9800. Calculate the profit or loss from the position in futures market if in 3 months the contracts are trading at 91.900. a. $168334.11 O b. $-16833.41 c. $-170862.48 O d. $392716.91 O e. $-1708624.84
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7 Quatro Company issues bonds dated January 1, 2021, with a par value of $700,000. The bonds' annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $717,237. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare a straight-line amortization table for these bonds. Complete this question by entering your answers in the tabs below. Required 1 Semiannual Interest Period- End 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 06/30/2023 12/31/2023 Required 2 Required 3 Prepare a straight-line amortization table for these bonds. Note: Round your intermediate calculations to the nearest dollar amount. Unamortized Premium X Answer is complete but not entirely correct. $ 2,873 2,873 X 2,873 x 2,873 x 2,873 x 14,364 0 $ Carrying…
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ABC Corporation bought 5 short futures. The contract size is 10,000 shares of Mining Inc. The strike price is P87 per share. If the market price of a share is P91 per share on the agreed date, ABC would have a total gain/(loss) from these contracts amounting to
1. You decide to short sell 100 shares of ABC Corporation when it is selling at its yearly high of P42.25. Your broker tells you that your margin requirement is 60% and that the commission on the sale is P20. While you are short, ABC Corporation pays a P.85 per share dividend. At the end of one year you buy your ABC Corporation shares (cover your short sale) at P44 and are charged a commission of P20 and a 5% interest rate. a. What is your peso return on the investment? (Show the solution and computation). a. P384.50 b. P432.88 c. -P432.88 d. -P384.50 b. What is your rate of return on the investment? a. 10.48% b. 12.87% c. -15.05% d. -13.98%
2) On January 1, 2020, CBT Corp issued 20,000, 20 year, $1,000 bonds. The bonds have an annual coupon of $50, payable on December 31 of each year. Each bond can be convertible in to five common shares. The bonds sold for 120 and it is estimated that the bonds would have sold for 105 if they did not have the convertible option. Required: a. Prepare the journal entry to recognize the bond sale made by CBT on January 1, 2020. b. On January 1, 2023, 2,000 bonds were converted into common shares. Prepare the journal entry to recognize the conversion transaction.
On March 1, 2020, ABC Company issued P5,000,000 of 12% nonconvertible bonds at 103 which are due on February 28, 2025. In addition, each P1,000 bond issue was issued with 30 detachable share warrants, each of which entitled the bondholder to purchase for P50 one ordinary share of ABC Company par value P25. On March 1, 2020, the quoted market value of each warrant was P4. The market value of the bonds ex-warrant at the time of issuance is 95. What amount of the proceeds from the bond issue should ABC record as an increase in shareholders' equity? Round answer to whole number.
On January 1, 2021, Ithaca Corp. purchases Cortland Inc. bonds that have a face value of $210,000. The Cortland bonds have a stated interest rate of 10%. Interest is paid semiannually on June 30 and December 31, and the bonds mature in 10 years. For bonds of similar risk and maturity, the market yield on particular dates is as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.): January 1, 2021 11.0 % June 30, 2021 12.0 % Required:1. Calculate the price Ithaca would have paid for the Cortland bonds on January 1, 2021 (ignoring brokerage fees), and prepare a journal entry to record the purchase.2. Prepare all appropriate journal entries related to the bond investment during 2021, assuming Ithaca accounts for the bonds as a held-to-maturity investment. Ithaca calculates interest revenue at the effective interest rate as of the date it purchased the bonds.3. Prepare all appropriate…
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