On January 1, 2016, Saul Company issued convertible bonds with a face amount ofP 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100par value. The bond have a 5-year life with 10% stated interest rate payable annuallyevery December 31.The fair value of the convertible bonds without conversion option is computed atP 5,399,300 on January 1, 2016.Rectangular SnipOn Dec. 31, 2018, the convertible bonds were not converted but fully paid forP5,550,000.On such date, the fair value of the bonds without conversion privilege is P 5,400,000and the carrying amount is P 5,178,300.What is the carrying amount of the bonds payable on January 1, 2016?

It is the amount liable to the bondholders by the issuer of bonds. This bonds payable will be…

Answered: On January 1, 2016, Saul Company issued…

On January 1, 2016, Saul Company issued convertible bonds with a face amount of P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2024, Madison Products issued $45 million of 8%, 10-year convertible bonds at a net price of $45.5 million. ■ Madison 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 Madison's no par common stock. • Madison records interest by the straight-line method. ⚫ On June 1, 2026, Madison notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2026. ■ By June 30, all bondholders had chosen to convert their bonds into shares as of the interest payment date. ⚫ On June 30, Madison paid the semiannual interest and issued the requisite number of shares for the bonds being converted. Required: Assume that Madison Products prepares its financial statements according to International Financial Reporting Standards using the net method. 1. & 2. Prepare the journal entries for the issuance of the bonds by…
Nichols Corporation has the following convertible bonds. A $100,000 convertible bond was issued at par on January 1, 2021, at 4%. The bond is convertible into 30,000 shares of common stock. Additionally, there was a convertible bond that was purchased on November 1, 2021, at par, for $200,000 with an interest rate of 6%, this bond is convertible into 20,000 shares of common stock. Both bonds pay interest annually. Nichols Corporation has total revenue of 800,000 and expenses of 400,000, which does not include interest expense or taxes. The tax rate is 40%. Additionally, the organization currently has 300,000 shares of common stock outstanding for the entire year. No dividends were paid in 2021. A. Calculate Earnings per share. B. Calculate Dilutive Earnings per share using the if converted method.
On January 1, 2017, Slug Corporation issued $6.4 million of 6%, 10-year convertible bonds at 103. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 30 shares of $1 par common stock. Fuzz Company purchased 30% of the issue as an investment. On July 1, 2021, Fuzz converted all of its bonds into common stock of Slug. The market price per share for Slug was $36 at the time of the conversion. Both companies use the straight-line method for amortization. Required: 1. Prepare journal entries for the issuance of the bonds on the issuer and the investor books. 2. Prepare the journal entries for the conversion on the books of the issuer and the investor. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare journal entries for the issuance of the bonds on the issuer and the investor books. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your…
Archer Inc. issued $4,000,000 par value, 7% convertible bonds at 99 for cash. If the bonds had not included the conversion feature, they would have sold for 95. Prepare the journal entry to record the issuance of the bonds.
On January 1, 2016, Saul Company issued convertible bonds with a face amount of P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100 par value. The bond have a 5-year life with 10% stated interest rate payable annually every December 31. The fair value of the convertible bonds without conversion option is computed at P 5,399,300 on January 1, 2016. On Dec. 31, 2018, the convertible bonds were not converted but fully paid for P5,550,000. On such date, the fair value of the bonds without conversion privilege is P 5,400,000 and the carrying amount is P 5,178,300. What is the premium on bonds payable on January 1, 2016?|
On January 1, 2016, Saul Company issued convertible bonds with a face amount of P 5,000,000 for P 6,000,000. The bonds are convertible into 50,000 shares with P 100 par value. The bond have a 5-year life with 10% stated interest rate payable annually every December 31. The fair value of the convertible bonds without conversion option is computed at P 5,399,300 on January 1, 2016. On Dec. 31, 2018, the convertible bonds were not converted but fully paid for P5,550,000. On such date, the fair value of the bonds without conversion privilege is P 5,400,000 and the carrying amount is P 5,178,300. What is the loss on the extinguishment of the convertible bonds payable on December 31, 2018?
Oriole Corporation issued $6600000 of 9%, ten-year convertible bonds on July 1, 2024 at 96.1 plus accrued interest. The bonds were dated April 1, 2024 with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2025, $1320000 of these bonds were converted into 600 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. If Interest Payable was credited when the bonds were issued, what amount should be debited to Interest Expense on October 1, 2024? O $155100 O $297000 O $141900 O $148500
On January 1, 2016, Madison Products issued $40 million of 6%, 10-year convertible bonds at a net price of $40.8 million. Madison 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 Madison’s no par common stock. Madison records interest by the straight-line method. On June 1, 2018, Madison notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2018. By June 30 all bondholders had chosen to convert their bonds into shares as of the interest payment date. On June 30, Madison 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 Madison. 2. Prepare the journal entry for the June 30, 2016, interest payment. 3. Prepare the journal entries for the June 30, 2018, interest payment by Madison and…
Smart Inc. issued P7,500,000 face amount of 12% convertible bonds at 110 on January 1, 2020, maturing on January 1, 2024 and paying interest semi-annually on January 1 and July 1. It is estimated that the bonds would sell only at 105 without the conversion feature. Each P1,000 bond is convertible into 10 ordinary shares with P100 par value. What is the increase in shareholders' equity arising from the original issuance of the convertible bonds? a. Zerob. P 150,000c. P 375,000d. P 750,000
On March 1, 2020, ABC Company issued P5,000,000 of 12% nonconvertible bonds at 103 which are due on February 28, 2025. In addition, each P1,000 bond issue was issued with 30 detachable share warrants, each of which entitled the bondholder to purchase for P50 one ordinary share of ABC Company par value P25. On March 1, 2020, the quoted market value of each warrant was P4. The market value of the bonds ex-warrant at the time of issuance is 95. What amount of the proceeds from the bond issue should ABC record as an increase in shareholders' equity? Round answer to whole number.
1. On January 1, 2020, CHAR Company issued P 10,000,000 convertible bonds with a stated rate of 12% at 110. The principal of the bonds is payable on December 31, 2024. Interest on the bonds is payable annually starting December 31, 2020. Each P 5,000 bond is convertible into 20 ordinary shares of P 50 par. Without the bond conversion privilege, the bonds would have sold to yield 10%. On December 31, 2021, after paying periodic interests, half of the bonds issued were converted to ordinary shares. On October 1, 2023, half of the remaining bonds were retired at 102 plus accrued interest. Without the bond conversion privilege, the bonds are quoted at 101. How much was credited to the share premium- ordinary account at the time of conversion of bonds on December 31, 2021? (For present value factors, do not round off) 2. On January 1, 2021, MAMA Company sold the property to the PAPA Company. There was no established exchange price for the property, and PAPA gave MAMA a P2,000,000…
20. On December 31, 2011, Cey Company had outstanding 10%,P1,000,000 face amount convertible bonds payable maturing on December 31, 2014. Interest is payable on June 30 and December 31. Each P1,000 bond is convertible into 50 shares of P10 par value. On December 31, 2011, the unamortized premium on bonds payable was P60,00O. On December 31, 2011, 400 bonds were converted when Cey's share had a market price of P24. Cey incurred P4,000 in connection with the conversion. No-equity component was recognized when the bonds were originally issued. What is the share premium from the issuance of shares as a result of the bond conversion on December 31, 2011? a. 176,000 b. 220,000 c. 276,000 d. 280,000