For each of the unrelated transactions described below, present the entries required to record each transaction. Please fill in all the boxes as shown in the image.1. Headland Corp. issued $21,400,000 par value 9% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95.2. Sage Company issued $21,400,000 par value 9% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5.3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 10%, $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $51,000 of unamortized discount applicable to the bonds, and the company paid an additional $68,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. No. Account Titles and ExplanationDebitCredit1.2.3.

Bonds are considered a financial instrument used to raise finance for the organization. It is also…

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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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For each of the unrelated transactions described below, present the entries required to record each transaction. Please fill in all the boxes as shown in the image.

1.		Headland Corp. issued $21,400,000 par value 9% convertible bonds at 98. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95.
2.		Sage Company issued $21,400,000 par value 9% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5.
3.		Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 10%, $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $51,000 of unamortized discount applicable to the bonds, and the company paid an additional $68,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.

No. Account Titles and Explanation
Debit
Credit
1.
2.
3.

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