AccountingIn 2015, The Platinum Company issued$700,000 8% bonds with 700 nondetachablewarrants for $765,000 cash. Each warrantentitled the holder to buy 100 shares of ThePlatinum Company's $2 par common stock at$20 per share and required surrender of theattached $1,000 bond. On March 2, 2021, allThe Platinum Company bondholders exercisedtheir warrants for new shares and forfeited thebonds when shares were trading at $40 pershare. On March 2, 2021, the unamortizedpremium on the bonds was $25,000.Prepare the necessary journal entry for the bondconversion on March 2, 2021 Assume that ThePlatinum Company uses the market method torecord the stock issuances.

Bonds with detachable warrants or bonds with warrants are those in which the issuer of the bonds…

Answered: In 2015, The Platinum Company issued…

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, 2019, Ventionary issued bonds with an estimated value of 10 years, $ 3,000,000 (face value), and interest of 6%. Each $ 1,000 of bond will be converted into 15 shares of common stock. Net income for 2020 is $ 240,000, at 40% tax. Interest expense on the liability component in 2020 is $ 210,000. The company has 100,000 shares in 2019. There are no bonds converted in 2019. Calculate the 2019 diluted EPS value.
On January 1, 2015, ABC Co. issued ten-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable annually on January 1. The bonds were sold to yield 12%. The issue price of the bonds was $886,996 On October 31, 2017, the company decided to extinguish 55% of the bonds by making a cash payment of $520,000. The cash payment includes any accrued interest by the date of extinguishment. The company uses the effective-interest method of amortization. Required: For ABC Co: Prepare the necessary journal entry(ies) on September 30, 2016. SHARE
Flint Company invests $10,000,000 in 6% fixed rate corporate bonds on January 1, 2020. All the bonds are classified as available-for-sale and are purchased at par. At year-end, market interest rates have declined, and the fair value of the bonds is now $10,710,000. Interest is paid on January 1.Prepare journal entries for Flint Company to (a) record the transactions related to these bonds in 2020, assuming Flint does not elect the fair option; and (b) record the transactions related to these bonds in 2020, assuming that Flint Company elects the fair value option to account for these bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Date Account Titles and Explanation Debit Credit (a)…
On January 1, 2021, Rupar Retailers purchased $130,000 of Anand Company bonds at a discount of $9,000. The Anand bonds pay 6% interest but were purchased when the market interest rate was 7% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. Rupar accounts for the bonds as a held-to-maturity investment, and uses the effective interest method. In Rupar's December 31, 2021, journal entry to record the second period of interest, Rupar would record a credit to interest revenue of: Multiple Choice $4,235. $4,247. $4,550. $3,900.
please answer both the parts within 30 minutes.
5. On December 31, 2018, the balance sheet of Alphabet Corporation reported bonds outstanding with a face value of $6,000,000 and a related unamortized premium of $180,000. Interest is payable semiannually on January 1 and July 1. Prepare an entry in journal form without explanation on January 1, 2018, to record the conversion of bonds with a face value of $2,400,000 into common stock. Each $1,000 bond is convertible into 30 shares of $20 par value common stock. (6]
On January 1, 2020, Booker Corp. issued $9 million of ten year bonds at 100.5 (Booker amortizes any premium/discount on a straight line basis). Each $1,000 bond is convertible into 30 shares of Booker's $7.00 par value common stock. On January 1, 2024, holders of 70% of the bonds exercised the privilege, and converted their bonds into Booker common stock. The journal entry to record the conversion will include a credit to "Paid in Capital in Excess of Par - Common" of
On January 1, 2015, ABC Co. issued ten-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective-interest method of amortization. Required: For ABC Co: Prepare the necessary journal entry(ies) on September 30, 2016. OR SHARE
In the following two independent cases, the company closes its books on December 31: 1. Splish Brothers Inc. sells $ 2.16 million of 8% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The bonds’ due date is September 1, 2023. The bonds yield 10%. 2. Buffalo Ltd. sells $ 6.20 million of 9% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The bonds’ due date is June 1, 2024. The bonds yield 8%. On October 1, 2021, Buffalo buys back $ 1.24 million worth of bonds for $ 2.11million, including accrued interest. For situation 1, use the effective interest method for discount and premium amortization and prepare any necessary amortization tables. (Hint: Refer to Chapter 3 for tips on calculating.) (Round answers to 0 decimal places, e.g. 5,275.) For situation 2, use the effective interest method for discount and premium amortization and prepare any necessary amortization tables. (Hint: Refer to Chapter 3 for tips on calculating.)…
On April 1, 2023, Sheridan Corp. sold 11,000 of its $900 face value, 15-year, 10% bonds at 98. Interest payment dates are April 1 and October 1. The company follows ASPE and uses the straight-line method of bond discount amortization. On March 1, 2024, Sheridan extinguished 2,750 of the bonds by issuing 80,000 shares. At this time, the accrued interest was paid in cash to the bondholders whose bonds were being extinguished. In a separate transaction on March 1, 2024, 120, 000 of the company's shares sold for $32 per share .a.Prepare Sheridan's journal entry to record the issuance of the bonds on April 1, 2023 DR.cash 9702000 Cr.bonds payable 9702000 b.Prepare Sheridan's journal entry to record the payment of the semi-annual interest on October 1, 2023. Dr. interest expense5016000 Cr.cash 495000 Cr.bonds payable 6600 c.Prepare Sheridan's journal entry to record the accrual of the interest expense on December 31, 2023. Dr. interest expense 250800 Cr,interest payable 247500 Cr.bonds…
Bundle Company issues 1,000,000 par value 10 year bonds at 102 on January 1, 2018, which Mega Corporation purchased. The coupon rate on the bonds is 9%. Interest payment are made semiannually in July 1 and January 1. On July 1, 2021, Parent Company purchased 500,000 par value of the bonds from Mega Corporation for 492,200. Bundle Company owns 65% of A Company's voting shares. During 2021, Bundle Company recorded an interest income on yhe aforementioned bonds payable of 23,100, while A Company recorded an interest expese of 44,000, in ehich 22,000 was incurred from July 1 to December 31. B Company has a comprehensive income of 500,000 while A Company has 150,000. No other intercompany transaction occurred during 2021. Assume straight-line amortization. Compute for the gain on extinguishment of bonds to be recognized in the 2021 consolidated statement of comprehensive income. Compute the comprehensive income assigned to the controlling interest for 2021. Compute the comprehensive…
On January 1, 2021, Fowl Products issued $89 million of 6%, 10-year convertible bonds at a net price of $91.5 million. Fowl recently issued similar, but nonconvertible, bonds at 99 (that is, 99% of face amount). The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 30 shares of Fowl's no par common stock. Fowl records interest by the straight-line method. On June 1, 2023, Fowl notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2023. By June 30 all bondholders had chosen to convert their bonds into shares as of the interest payment date. On June 30, Fowl paid the semiannual interest and issued the requisite number of shares for the bonds being converted. Required: 1. Prepare the journal entry for the issuance of the bonds by Fowl. 2. Prepare the journal entry for the June 30, 2021, interest payment. 3. Prepare the journal entries for the June 30, 2023, interest payment by Fowl and the conversion of the…

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