Provide solution On March 1, 2016, E Corp. issued $1,500,000 of 15%nonconvertible bonds at 105, due on February 28, 2026.Each $1,000 bond was issued with 45 detachable stockwarrants, each of which entitled the holder to purchase,for $65, one share of Evan's $40 par common stock. OnMarch 1, 2016, the market price of each warrant was $5. Bywhat amount should the bond issue proceeds increaseshareholders' equity?A. $75,000B. $337,500C. $363,500D. $0

Step 1: Define Stock WarrantsCorporations issue stock warrants that give the investors the right to…

Answered: On March 1, 2016, E Corp. issued…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EB: Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market...

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Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
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.
On July 1, 2017, Roberts Corporation issued $3,000,000 of9% bonds payable in 20 years. The bonds include detachablewarrants giving the bondholder the right to purchasefor $30 one share of $1 par value common stock atany time during the next 10 years. The bonds were soldfor $3,000,000. The value of the warrants at the time ofissuance was $100,000. Prepare the journal entry to recordthis transaction.
The Colson Company issued $300.000 of 10% bonds on January 1, 2017. The bonds are due January 1, 2022, with interest payable each July 1, and January 1. The bonds are issued at face value. Prepare Colson's Journal entry for the July 1 lnterest Payment. O Cash $15.000 Interest Expense O nterest Expense Cash $15.000 $15.000 $15.000 O nterest Expense $15.000 Onterest Payable O None of the above $15.000
On March 1, 2021, E Corp. issued $1,000,000 of 10% nonconvertible bonds at 104, due on February 28, 2031. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the holder to purchase, for $60, one share of Evan's $30 par common stock. On March 1, 2021, the market price of each warrant was $4. By what amount should the bond issue proceeds increase shareholders' equity?
On August 1, 2024, Gorczany Incorporated issued $11 million of 10-year, 10% bonds at 106. Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitled the bondholder to purchase, for $58, one share of Gorczany's no par common stock. On August 1, 2024, the market value of each warrant was $4.50 By what amount should Gorczany's shareholders' equity increase when the bonds are issued? A B C D E $1,485,000 $11,000 $11,660,000 $349,800 $11,000,000 1
On August 1, 2016, Limbaugh Communications issued $30 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2036. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Limbaugh Communications’ no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2016, the market value of the common stock was $58 per share and the market value of each warrant was $8. In February 2027, when Limbaugh’s common stock had a market price of $72 per share and the unamortized discount balance was $1 million, Interstate Containers exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2016, to record (a) the issuance of the bonds by Limbaugh and (b) the investment by Interstate. 2. Prepare the journal entries for both Limbaugh and Interstate in February 2027, to record the exercise of the warrants.
On January 2, 2025, Abrams Falls Inc. issued $30 million 9% bonds due in 2045 at 102. With each $1,000 bond were 20 detachable warrants. Each warrant permitted the holder to buy one share of common stock at $30 per share. After issuance, the warrants were listed at $10 on a stock exchange. The entry to record the bond issuance should include:
(Issuance of Bonds with Detachable Warrants) On September 1, 2017, Sands Company sold at 104 (plus accrued interest) 4,000 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $15 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. No fair value can be determined for the Sands Company bonds.Interest is payable on December 1 and June 1. Bond issue costs of $30,000 were incurred.InstructionsPrepare in general journal format the entry to record the issuance of the bonds.

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