Katrina Company reported the following information at the end of reporting period: 1,500,000 Bonds payable – 10% Preference share capital, 12% cumulative, P100 par, 30,000 shares Ordinary share capital, 100,000 shares, P50 par 3,000,000 5,000,000 The bonds are convertible into ordinary shares in the ratio of 20 ordinary shares for every P1,000 bond. The preference share is convertible into ordinary share in the ratio of two ordinary shares for one preference share. The net income for the year was P3,695,000 and the income tax rate is 30%. Required: 1. Basic earnings per share 2. Diluted earnings per share

Katrina Company reported the following information at the end of reporting period: 1,500,000 Bonds payable – 10% Preference share capital, 12% cumulative, P100 par, 30,000 shares Ordinary share capital, 100,000 shares, P50 par 3,000,000 5,000,000 The bonds are convertible into ordinary shares in the ratio of 20 ordinary shares for every P1,000 bond. The preference share is convertible into ordinary share in the ratio of two ordinary shares for one preference share. The net income for the year was P3,695,000 and the income tax rate is 30%. Required: 1. Basic earnings per share 2. Diluted earnings per share

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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ABC Corporation has 4,000, 10%, 10-year bonds, face value 1,000, and sold it at 105. Each bond is accompanied by one warrant that permits the bondholder to purchase 20 shares of capital, par 50, at 55 per share, or a total of 80,000 shares. The prevailing market rate of interest for similar bonds without warrants is 12% per annum with which the PV of 1 at 12% for 10 periods is 0.322 and in an ordinary annuity is 5.65 What is the entry to record issuance of the compound instrument and the exercise of the 70% warrants? Assume also the expiration of the 30% warrants and prepare the entry.
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Clear Water Corp. issued $100,000 of 7% 5 year convertible bonds on January 1, 2015. The bonds were issued at 104 and pay interest on June 30 and December 31 of each year. By December 31, 2018, the market price of the stock had increased, and the investors decided to convert the bonds into stock. Each $1,000 bond is convertable into 30 shares of the $2 par value common stock. Determine the balance of the Premium on the bonds and prepare the journal entry to record the conversion of the bonds. (two questions) GENERAL JOURNAL POST Date Account/Description REF. Debit Credit
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