Cullumber Corporation issued 5,500, five year, 3% bonds at 103 on January 1, 2020. Interest is paid annually. Each $1,000 bondcarried one detachable warrant allowing the holder to purchase 100 common shares in Cullumber at $11 per share, the price atwhich Cullumber shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 5%.On June 30, 2020, 1,100 of the bond holders exercised the options to buy the shares.Prepare the journal entries to record these events. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and thefinal answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indentmanually.)DateAccount Titles and ExplanationDebitCreditJan. 1, 2020CashBonds PayableContributed Surplus Stock WarrantsJun. 30,2020Cash1210000Contributed Surplus Stock WarrantsCommon Shares

The objective of the question is to prepare the journal entries for the issuance of bonds and the…

Answered: Cullumber Corporation issued 5,500,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2018, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bondswere priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. OnDecember 31, 2018, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are nottraded on an active exchange. The increase in the market interest rate was due to a 1% increase in general (riskfree) interest rates.Required:1. Using the information provided, estimate the fair value of the bonds at December 31, 2018.2. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment).3. Prepare the journal entry to record interest on December 31, 2018 (the second interest payment).4. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018,balance sheet
On April 1, 2020, Dalton Ltd. issued a convertible $3,000,000, 25-year, 6% bond at 99. The bond is convertible at a rate of 10 common shares for each $1,000. Similar bonds trading on the market without this option carry an interest rate of 7%. Interest on the bond is paid semi-annually on April and October 1st each year, beginning in October 1, 2020. Dalton uses the effective interest method of amortizing discounts or premiums. REQUIRED: Prepare the journal entry to record the bond issuance using the residual value (incremental) method. Show all calculations. Prepare the journal entry for the first interest payment on October 1, 2020. Prepare the entry on Dalton’s books assuming that 60% of the bonds were converted immediately after the October 1, 2021 interest payment. Prepare the adjusting entry for the interest accrual on December 31, 2021. Prepare the journal entry for the interest payment on April 1, 2022 Prepare the entry on Dalton’s books on the maturity date of the bond.
On July 1, 2021, GIl Inc. received 103,288 for each 100,000 face value bonds, 12% bonds, a price that yields 10%. What is the amount of interest payable for ten pieces of this bond as of December 31, 2021?
Fountain Limited sells $300,000 of 10% bonds on March 1,2020. The bonds pay interest on September 1 and March 1. The bonds yield 12%, selling for $283,250. Required – Give entries from March 1, 2020 to March 1, 2021 as it relates to this bond.
Mango Co. issued bonds payable on January 1, 2022. Each $1,000 bond is convertible to 10 shares of common stock after January 1, 2024. The bonds have a 5-year term, a stated rate of 8%, and pay interest annually on January 1. The bonds were issued at a premium of $25,274 which provides an effective interest rate of 6%. (Hint: Prepare an amortization table for the five-year term of the bonds. Note that 2023 is the second year in the term of the bonds.) Prepare the adjusting entry at Dec. 31 , 2023.
Sunland Corporation issued 6,000, five year, 3% bonds at 103 on January 1, 2023. Interest is paid annually. Each $1,000 bond carried one detachable warrant allowing the holder to purchase 100 common shares in Sunland at $9 per share, the price at which Sunland shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 6%. On June 30, 2023, 1,200 of the bond holders exercised the options to buy the shares. Prepare the journal entries to record these events. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places eg. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date January 1, 2023 June 30, 2023 Account Titles and…
On December 1, 2021, Bramble Corp.issued 680 of its 8%, $1,000 bonds at 104. Attached to each bond was one detachable stock warrant entitling the holder to purchase 1 share of Bramble's common stock. On December 1, 2021, the market value of the bonds, without the stock warrants, was 97, and the market value of each stock purchase warrant was $50. The amount of the proceeds from the issuance that should be accounted for as the initial carrying value of the bonds payable would be $700,400 O $680,000 $672,533 $665,380
On March 1, 2024, Baddour, Incorporated, issued 10% bonds, dated January 1, with a face amount of $160 million. The bonds were priced at $142.00 million (plus accrued interest) to yield 12%. The price if issued on January 1 would have been $139.25 million. Interest is paid semiannually on June 30 and December 31. Baddour’s fiscal year ends September 30. Required: 1. to 3. What would be the amount(s) related to the bonds Baddour would report in its balance sheet, income statement and statement of cash flows for the year ended September 30, 2024?
On July 1, 2018, Mason & Beech Services issued $33,000 of 10% bonds that mature in five years. They were issued at par. The bonds pay semiannual interest payments on June 30 and December 31 of each year. On December 31, 2018, what is the total amount paid to bondholders?
Libertine Co. issued $10,000,000 of 9%, 10-year, convertible bonds on January 1, 2020. Interest is paid annually on December 31. At the time of the bonds issuance, the market rate for non-convertible bonds was 10%. Each $1,000 bond is convertible into 15 common shares. In 2025, half of the bondholders decided to convert their bonds into common shares. How many shares were issued as a result of the conversion? Question 10 options: 75,000 140,783 15,000 150,000

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