Garr Co. issued $6,000,000 of 12%, 5-year convertible bonds on December 1, 2018 for $6,025,480 plusaccrued interest. The bonds were dated April 1, 2018 with interest payable April 1 and October 1. Bondpremium is amortized each interest period on a straight-line basis. Garr Co. has a fiscal year end ofSeptember 30.On October 1, 2019, $3,000,000 of these bonds were converted into 42,000 shares of $15 par commonstock. Accrued interest was paid in cash at the time of conversion.Instructions(a) Prepare the entry to record the interest expense at April 1, 2019. Assume that interest payable wascredited when the bonds were issued (round to nearest dollar).(b) Prepare the entry to record the conversion on October 1, 2019. Assume that the entry to recordamortization of the bond premium and interest payment has been made. Assume that the following data relative to Kane Company for 2019 is available:Net Income$2,100,000Transactions in Common SharesJan. 1, 2019, Beginning numberMar. 1, 2019, Purchase of treasury sharesJune 1, 2019, Stock split 2-1Nov. 1, 2019, Issuance of sharesChange(60,000)640,000240,000Cumulative700,000640,0001,280,0001,520,0006% Cumulative Convertible Preferred StockSold at par, convertible into 200,000 shares of common(adjusted for split).$1,000,000Stock OptionsExercisable at the option price of $25 per share. Averagemarket price in 2019, $30 (market price and option priceadjusted for split).90,000 sharesInstructions(a) Compute the basic earnings per share for 2019. (Round to the nearest penny.)(b) Compute the diluted earnings per share for 2019. (Round to the nearest penny.)

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Garr Co. issued $6,000,000 of 12%, 5-year convertible bonds on December 1, 2018 for $6,025,480 plus accrued interest. The bonds were dated April 1, 2018 with interest payable April 1 and October 1. Bond premium is amortized each interest period on a straight-line basis. Garr Co. has a fiscal year end of September 30. On October 1, 2019, $3,000,000 of these bonds were converted into 42,000 shares of $15 par common stock. Accrued interest was paid in cash at the time of conversion. Instructions (a) Prepare the entry to record the interest expense at April 1, 2019. Assume that interest payable was credited when the bonds were issued (round to nearest dollar). (b) Prepare the entry to record the conversion on October 1, 2019. Assume that the entry to record amortization of the bond premium and interest payment has been made.

Garr Co. issued $6,000,000 of 12%, 5-year convertible bonds on December 1, 2018 for $6,025,480 plus accrued interest. The bonds were dated April 1, 2018 with interest payable April 1 and October 1. Bond premium is amortized each interest period on a straight-line basis. Garr Co. has a fiscal year end of September 30. On October 1, 2019, $3,000,000 of these bonds were converted into 42,000 shares of $15 par common stock. Accrued interest was paid in cash at the time of conversion. Instructions (a) Prepare the entry to record the interest expense at April 1, 2019. Assume that interest payable was credited when the bonds were issued (round to nearest dollar). (b) Prepare the entry to record the conversion on October 1, 2019. Assume that the entry to record amortization of the bond premium and interest payment has been made.

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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