Exercise 14-28 (Algo) Bonds with detachable warrants (LO14-5) On August 1, 2021, Limbaugh Communications issued $35 million of 10% nonconvertible bonds at 102. The bonds are due on July 31, 2041. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Limbaugh Communications no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2021, the market value of the common stock was $58 per share and the market value of each warrant was $6. In February 2032, when Limbaugh's common stock had a market price of $70 per share and the unamortized discount balance was $1 million, Interstate Containers exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2021, to record (a) the issuance of the bonds by Limbaugh and (b) the investment by Interstate. 2. Prepare the journal entries for both Limbaugh and Interstate in February 2032, to record the exercise of the warrants.

Exercise 14-28 (Algo) Bonds with detachable warrants (LO14-5) On August 1, 2021, Limbaugh Communications issued $35 million of 10% nonconvertible bonds at 102. The bonds are due on July 31, 2041. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Limbaugh Communications no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2021, the market value of the common stock was $58 per share and the market value of each warrant was $6. In February 2032, when Limbaugh's common stock had a market price of $70 per share and the unamortized discount balance was $1 million, Interstate Containers exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2021, to record (a) the issuance of the bonds by Limbaugh and (b) the investment by Interstate. 2. Prepare the journal entries for both Limbaugh and Interstate in February 2032, to record the exercise of the warrants.

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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Subject- accounting
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Required information Exercise 9-18 (Algo) Record bonds issued at a premium and related annual interest (LO9-5) Skip to question [The following information applies to the questions displayed below.] On January 1, 2024, White Water issues $530,000 of 6% bonds, due in 20 years, with interest payable annually on December 31 each year.Assuming the market interest rate on the issue date is 5%, the bonds will issue at $596,050. Exercise 9-18 (Algo) Part 1 Required: 1. Complete the first three rows of an amortization schedule. (Hint: Use Illustration 9–7, except the dates for the first three rows will be 1/1/2024, 12/31/2024, and 12/31/2025 since interest is payable annually rather than semiannually. Interest expense for the period ended December 31, 2024, is calculated as the carrying value of $596,050 times the market rate of 5%.) (Round your final answers to the nearest whole dollar.)
Question 2. Recording and Reporting Bonds Robinson Inc., as a public company, issues $3 million of 10%, 10-year, corporate bonds on January 1, 2010. The bonds pay interest on every January 1 after the issuance. The company uses the effective-interest amortization method. Required: If market rate on issue date is 10%, prepare journal entries for the issuance and journal entries at the end of December 2010, 2011, and 2019. If market rate on issue date is 12%, prepare journal entries for the issuance and journal entries at the end of December 2010 and 2011. If market rate on issue date is 8%, prepare journal entries for the issuance and journal entries at the end of December 2010, 2011, and 2019.
Exercise 14-9 (Algo) Issuance of bonds; effective interest; amortization schedule; financial statement effects [LO14-2] When Patey Pontoons issued 6% bonds on January 1, 2024, with a face amount of $680,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: Determine the price of the bonds at January 1, 2024. (fill out table provided in image) Prepare the appropriate journal entries at maturity on December 31, 2027. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
ESPAÑOL INGLÉS FRANCÉS On July 1, 2021 ABC issued bonds dated March 1, 2021 and for their principal (maturity value) of 100,000. The contractual interest rate is equal to the effective interest rate of 14% (there is no premium or discount). On the issue date, the company recorded accrued interests with a credit to the interest payable account for $4,667. The bonds pay interest on March 1st and September 1st. How much will the interest expense account be debited for? to. $2,333 b. $9,333 C. $7,000 d. $4,667 MacBook Air V.
Question 7 of 10 Your answer is partially correct. BDM Corporation issued 1,200, ten year, 7% bonds for 105 on January 1, 2023. Interest is paid annually. Each $500 bond carried a detachable warrant allowing the holder to purchase 210 common shares in BDM at $15 per share, the price at which BDM shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 8%. On June 30, 2023, 180 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 0 decimal places eg. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Date January 1, 2023 June 30, 2023 V Account Titles and Explanation Cash Bonds…
Req 1 to 3 Req 4 At what amount will Federal report the bonds among its liabilities in the December 31, 2024, balance sheet? Note: Round your final answer to the nearest whole dollar. Bonds amount that will be reported on balance sheet at December 31, 2024
Subject: accounting
Required information Problem 9-5A (Algo) Record bond issue and related interest (LO9-5) Skip to question [The following information applies to the questions displayed below.] On January 1, 2024, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $400,000 of 6% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Problem 9-5A (Algo) Part 1 Required:1. If the market interest rate is 6%, the bonds will issue at $400,000. Record the bond issue on January 1, 2024, and the first two semiannual interest payments on June 30, 2024, and December 31, 2024. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
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