On January 1, 2025, Coronado Company issued 10-year, $1,840,000 face value, 6% bonds, at par. Each $1,000 bond is convertibleinto 16 shares of Coronado common stock. Coronado's net income in 2025 was $473,800, and its tax rate was 20%. The companyhad 103,000 shares of common stock outstanding throughout 2025. None of the bonds were converted in 2025.a. Compute diluted earnings per share for 2025. (Round answer to 2 decimal places, e.g. 2.55.)Diluted earnings per shareb. Compute diluted earnings per share for 2025, assuming the same facts as above, except that $1,030,000 of 6% convertiblepreferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Coronado commonstock. (Round answer to 2 decimal places, e.g. 2.55.)Diluted earnings per share4.24$4.38

The earnings per share which is computed on the basis of convertible securities is classified as…

Answered: On January 1, 2025, Coronado Company…

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, 2024, Gless Textiles issued $12 million of 9%, 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 10% of the issue as an investment. Required: 1. Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. 2. Prepare the journal entries for the June 30, 2028, interest payment by both Gless and Century assuming both use the straight- line method. 3. 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). Complete this question by entering your answers in the tabs below.…
Arco, Inc. issued $300,000 of 4%, 10-year convertible bonds at par on July 1, 2022. Each bond has a par value of $1000. The bonds include the option for bondholders to convert each bond into 50 $1 par value shares of common stock beginning two years after the date of issue. The market price of the stock at the time of issue is $25 per share and the beneficial conversion option is valued at $75,000. On July 2, 2024, when the market price of the stock is $35 and the balance in the Discount account is $66,000, all of the bondholders convert the bonds. What is the proper entry to record the conversion of the bonds? Group of answer choices Date Account Debit Credit July 2, 2024 Bonds Payable 300,000 Discount on Bonds Payable 75,000 Common Stock, $1 par, 15,000 shares 300,000 Add. Paid-in Capital—Bene. Conv. Option 75,000 Date Account Debit Credit July 2, 2024 Bonds Payable 300,000 Add. Paid-in Capital—Bene. Conv. Option 75,000 Discount…
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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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…
On January 1, 2022, Iced Latte Corporation issued 5,000 10-year bonds of 12% P1,000 face value, each with warrants to acquire ordinary shares at P60 per share. The interest on the bonds is payable annually every December 31. Each bond contains one warrant which can be used to acquire 5 shares of P50 par value ordinary shares. It is estimated that without the warrants, the bonds would sell at 98 (at an effective interest of 12.36%) The bond price with warrants is 106. How much is the interest expense should Iced Latte Corporation reported in its Income statement for the year ended December 31, 2023?
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On September 30, 2023, Sunland Inc. issued $3,280,000 of 10-year, 8% convertible bonds for $3,772,000. The bonds pay interest on March 31 and September 30 and mature on September 30, 2033. Each $1,000 bond can be converted into 80 no par value common shares. In addition, each bond included 20 detachable warrants. Each warrant can be used to purchase one common share at an exercise price of $15. Immediately after the bond issuance, the warrants traded at $3 each. Without the warrants and the conversion rights, the bonds would have been expected to sell for $3,444,000. On March 23, 2026, half of the warrants were exercised. The common shares of Sunland were trading at $20 each on this day. Immediately after the payment of interest on the bonds, on September 30, 2028, all bonds outstanding were converted into common shares. Assume the entity follows IFRS. (e) Your answer is partially correct. Prepare the journal entry to account for the exercise of the warrants on March 23, 2026. (Credit…
On August 1, 2024, Perez Communications issued $36 million of 12% nonconvertible bonds at 105. The bonds are due on July 31, 2044. Each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of Perez Communications’ no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2024, the market value of the common stock was $48 per share and the market value of each warrant was $8. In February 2035, when Perez common stock had a market price of $62 per share and the unamortized discount balance was $2 million, Interstate Containers exercised the warrants it held. Questions: Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate. Prepare the journal entries for both Perez and Interstate in February 2035, to record the exercise of the warrants.
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