5. On January 1, 20x1, Kindness Co. issued 3-year, 10%, P2,000,000 convertible bonds for P2,200,000. Principal is due at maturity but interest is payable every year-end. The bonds are convertible into 6,000 ordinary shares with par value per share of P200. On issuance date, the prevailing market rate of interest for similar debt without a conversion feature was 12%. On December 31, 20x2, Kindness Co. retired all the bonds for P2,000,000. On retirement date, the current rate for similar debt instrument without a conversion feature was 11%. Requirement: Provide all the entries in 20x1 and 20x2.

5. On January 1, 20x1, Kindness Co. issued 3-year, 10%, P2,000,000 convertible bonds for P2,200,000. Principal is due at maturity but interest is payable every year-end. The bonds are convertible into 6,000 ordinary shares with par value per share of P200. On issuance date, the prevailing market rate of interest for similar debt without a conversion feature was 12%. On December 31, 20x2, Kindness Co. retired all the bonds for P2,000,000. On retirement date, the current rate for similar debt instrument without a conversion feature was 11%. Requirement: Provide all the entries in 20x1 and 20x2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, Zonoz, Inc. issued a 10-year semiannual bond with a face value of $590,000 that pays 2.5% interest. On the date of issue, the market for similar bonds was 6,0%. How much was Zonoz able to raise from issuing this bond? For numerical entries, please 1. do NOT enter commas 2. do NOT enter the dollar symbol: $ 3. DO enter the percent symbol when it is needed: % 4. enter dollar amounts to the nearest cent, for example: 12345,67 Cash Flow Diagram r=0 N Please complete the TVM Framework table to compute the amount that Zonoz was able to raise by issuing this bond. Time Value of Money (TVM) Framework C PMT FV PV CPT type n 1 What Excel function and arguments to that function would you use to compute this value? -function( rate, nper. pmt. [FV], [type]) IM
Please answer number 10 (include excel if needed)
am.101.
On January 1, 20x1, ABC Co. issued 1,000, ₱4,000, 12%, 3-year bonds. Principal is due on December 31, 20x3 but interests are due annually every year-end. The effective interest rate is 10%. The bonds payable will be presented in the Dec 31, 20X2 balance sheet as:PV of P1 at 12% for 3n = . 71178 PV of P1 at 10% for 3n = .75131PV ordinary annuity at 12% for 3n = 2.40183 PV ordinary annuity at 10% for 3n = 2.48685 Current liability of 4,072,703 Current liability of 4,000,000 Non current liability of 4,000,000 Non current liability of 3,928,569
On December 31, 2006, Moses Company issued P5,000,000 face value, 5-year bonds at 109. Each P1,000 bond was issued with 50 detachable stock warrants, each of which entitled the bondholder to purchase one share of P5 par value common at P25. Immediately after issuance, the market value of each warrant was P5. The stated interest rate on the bonds is 11% payable annually every December 31. However, the prevailing market rate of interest for similar bonds without warrants is 12%. Use two decimal points. On December 31, 2006, what amount should Moses record as discount or premium on bonds payable?
Eagle Corporation issued $9,950,000, 6 percent bonds dated April 1, year 1. The market interest rate was 7 percent, with interest paid each March 31. The bonds mature in three years, on March 31, year 4. Eagle's fiscal year ends on December 31. Use Table 8C1, Table BC.2. Required: 1. What was the issue price of these bonds? (Round time value factor to 4 decimal places. Round the final answer to the nearest whole dollar.) Answer is complete but not entirely correct. Bond issue price $ 9,688,881 2. Compute the interest expense for the period ended December 31, year 1. The company uses the effective-interest method of amortization. (Round time value factor to 4 decimal places. Round intermediate and final answer to the nearest whole dollar.) Answer is complete and correct. Interest expense $ 508,666 3. Show how the bonds should be reported on the statement of financial position at December 31, year 1. (Round intermediate and final answer to the nearest whole dollar.) Answer is complete…
Beluga Inc. issued 10-year bonds with a face value of $150,000 and a stated rate of 3% when the market rate was 4%. Interest was paid annually. The bonds were sold at 87.5. A. What was the sales price of the bonds? B. Were they issued at a discount, a premium, or at par?
On January 1, Elias Corporation issued 9% bonds with a face value of $75,000. The bonds are sold for $72,750. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is a.$6,750 b.$6,975 c.$2,250 d.$563
On February 1, 20x1, Broncos Company issued 9.75% bonds with a face amount of $20 million. The bonds mature in 5 years. For bonds of similar risk and maturity, the market yield is 11.5%. Interest is paid semiannually on July 31 and January 31. Broncos is a calendar-year corporation. 1) Determine the price of the bonds on February 1, 20x1 using the Excel. 2) Prepare the journal entry to record the bond issuance on February 1, 20x1. 3) Prepare an amortization table for 5 years using the effective interest method. 4) Prepare the journal entries (using the effective interest method) on July 31, 20x1 (1st payment). 5) Prepare the journal entry (using the effective interest method) on December 31, 20x1 (adjusting entry, no cash payment!) 6) What would be the journal entry if all bonds are retired at 102.5 on August 1, 20x2 right after the third payment. Prepare the journal entry for the bond retirement.
On January 1, 20x1, Cat Co. issued $1 million par value bonds at 104. The bonds have a coupon rate of 8% (payable June 30 and December 31) and mature in 10 years. Bond issue costs of $5,000 were incurred on the sale Under the FASB's preferred effective interest method for all amortization, interest expense on June 30, 20x1 would be $39.116 138.794 O138,616 $38.406
27. Ebasan Company issued 2,000 convertible bonds. The bonds have a 3 year term, and are issued at par with a face value of P1,000 per bond. Interest is payable annually in arrears at a nominal annual interest rate of 6%. Each bond is convertible at any time up to maturity into 250 ordinary shares. The entity has an option to settle the principal amount of the convertible bonds in ordinary shares or in cash. When the bonds are issued, the prevailing market interest rate for similar debt without a conversion option is 9%. At the issue date, the market price of one ordinary share is P3. The issuance of convertible bonds increased Ebasan's equity by A. 151,878 B. 896,025 C. 134,872 D. O
1. On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%.The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of thebonds? Explain why the cash received from selling this bond is different from the $200,000 face value of thebond