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.**Instructions:**Complete this question by entering your answers in the tabs below.**Required 1:**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 answers in whole dollars.)**Journal Entry Worksheet:**- **Tab 1:** Record the ISSUER–Issuance.- Note: Enter debits before credits.| Transaction | General Journal | Debit | Credit ||-------------|-----------------|-------|--------|| 1 | | | || | | | || | | | || | | | |This worksheet format is used to record the detailed journal entries related to the issuance of bonds. The user is prompted to enter debit and credit information for each transaction as part of the accounting process.

Transaction General Journal Debit Credit 1.a Cash (6400000*103%) $6,592,000…

Answered: On January 1, 2017, Slug Corporation…

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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Determine the maturity date and compute the interest of each of the following notes: (use 360 days for interest calculation. Round to the nearest dollar) The options for the shaded blanks A - E are the months January through December.
Windsor Inc. issued $3,840,000 of 11%, 10-year convertible bonds on June 1, 2020, at 99 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis.On April 1, 2021, $1,440,000 of these bonds were converted into 36,000 shares of $18 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued. (b) Prepare the entry to record the conversion on April 1, 2021. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.
On January 1, 2024, Gless Textiles issued $21 million of 10%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless’s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment. Required: Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight-line method. On July 1, 2029, when Gless’s common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method).
Sandhill Co. has $3890000 of 7% convertible bonds outstanding. Each $1000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2025, the holders of $1167000 bonds exercised the conversion privilege. On that date, the market price of the bonds was 105 and the market price of the common stock was $37. The total unamortized bond premium at the date of conversion was $288000. Sandhill should record, as a result of this conversion, a O loss of $11670. O credit of $176700.00 to Paid-in Capital in Excess of Par. O credit of $203100 to Paid-in Capital in Excess of Par. O credit of $92160 to Premium on Bonds Payable.
On May 1, 2021, Duck Corporation issued $2,000,000 of 8% nonconvertible bonds at 104, which are due on June 30, 2041. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Duck common stock, par value $25. The bonds without the warrants would normally sell at 95. On May 1, 2021, the fair value of Duck's common stock was $40 per share and the fair value of the warrants was $2.00. What amount should Duck record on May 1, 2021 as paid-in capital from stock warrants? O $100,000 O $73,600 O $104,000 O $85,200 L ASA
On May 1, 2021, Swifty Corporation issued $1410000 of 8% bonds at 104, which are due on April 30, 2031. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Swifty's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 95. On May 1, 2021, the fair value of Swifty's common stock was $35 per share and of the warrants was $2. On May 1, 2021, Swifty should credit Paid-in Capital from Stock Warrants for $59248. O $55048. O $102448. O $56400.
Hanshaben
McWherter Instruments sold $400 million of 8% bonds, dated January 1, on January 1, 2021. The bonds mature on December 31, 2040 (20 years). For bonds of similar risk and maturity, the market yield was 10%. Interest is paid semiannually on June 30 and December 31. Blanton Technologies, Inc., purchased $400,000 of the bonds as a long-term investment. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds issued on January 1, 2021. 2. Prepare the journal entries to record (a) their issuance by McWherter and (b) Blanton's investment on January 1, 2021. 3. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on June 30, 2021 (at the effective rate). 4. Prepare the journal entries by (a) McWherter and (b) Blanton to record interest on December 31, 2021 (at the effective rate). Complete this question by entering your answers in the tabs below. Required…
On January 1, 2024, Gless Textiles issued $10 million of 7%, 20-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless’s no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 15% of the issue as an investment. Questions: Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight-line method. On July 1, 2029, when Gless’s common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method).
On April 1, 2020, Oriole Company sold 20700 of its 11%, 15-year, $1,000 face value bonds at 97. Interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 1, 2021, Headland took advantage of favorable prices of its stock to extinguish 4800 of the bonds by issuing 158,400 shares of its $10 par value common stock. At this time, the accrued interest was paid in cash. The company’s stock was selling for $30 per share on March 1, 2021. Prepare the journal entries needed on the books of Headland Company to record the following. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (a) April 1, 2020: issuance of the bonds. (b) October 1, 2020: payment of…
On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne’s common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Payne’s common stock was $35 per share and of the warrants was $2. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for $36,560. $36,720. $37,080. $65,000.
On January 1, 2016, Cooper Corporation issued $800,000 of 12.5% bonds due January 1, 2023, at 102. The bonds pay interest semiannually on June 30 and December 31. Each $1,000 bond carried 10 warrants which allowed the acquired to exchange 1 share of $10 par common stock for $50. Sometime after the bonds were issued the bonds were quoted at 98 ex-rights and each individual warrant was quoted at $5. Subsequently, on April 30, 2017, 2,000 rights were exercised. Required: 1. Prepare the journal entry to record the bond issue. 2. Prepare the journal entries on April 30, 2017, to record the exchange of the warrants for common shares.

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