Recording Entries for Bonds with WarrantsHarley Corporation issued $150,000 of 6%, 10-year, nonconvertible bonds with detachable stock purchase warrants. Each $1,000 bond carried 20 detachable warrants, each ofwhich was for one share of Harley common stock, par $20, at a specified exercise price of $60. The bonds sold at 102 including the warrants (no bond price without warrantswas available), and immediately after the date of issuance, the detachable stock purchase warrants were selling at $4 each. All indicated transactions occurred in the samefiscal year.Requireda. Provide the entry for the issuer at the date of issuance of the bonds.b. Provide the entry for Harley assuming subsequent tender of all of the warrants by the investor for exercise at the specified exercise price. At this date, the stock was sellingat $75 per share.Text▸ Note: List multiple debits or credits (when applicable) in alphabetical order.Account NameDr.Cr.a.◆→b.♦Check

Issue size = $150,000 No. of bonds issued = Issue size/Face value of bond ($150,000/$1,000) = $150…

Answered: Recording Entries for Bonds with…

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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Accounting Randolph Company issued $1,000,000 of 6.5%, 8-year bonds dated June 1, 20X3, with semiannual interest payments on June 1 and December 1. The bonds were issued on June 1, 20X3, at 103 3/8. a. Were the bonds issued at a premium, a discount, or at face value? b. Was the market rate of interest higher, lower, or the same as the coupon rate of interest? c. How much cash was received by Randolph Company upon issuance of the bonds
Recording Entries for Bonds with Warrants On July 1, 2020, Salem Corporation issued $2,600,000 of 7% bonds due in 10 years. The bonds pay cash interest semiannually. Each $1,000 bond includes a detachable stock purchase warrant. Each warrant gives the bondholder the right to purchase, for $30, one share of $1 par value common stock at any time during the next 10 years. The bonds were sold at 101. The value of the stock purchase rights at the time of issuance was $130,000. The bonds would sell without warrants at $2,522,000. Required a. Record the entry for issuance of bonds using the proportional method. b. Record the entry for issuance of bonds assuming instead that the warrants are not detachable. Note: List multiple debits or credits (when applicable) in alphabetical order. Note: Round your answers to the nearest whole dollar.
On December 31, 20x0, the Robin Corporation issues $5,000,000 of 5% bonds. The bonds are due on December 31, 20x10 and were issued to yield 4.6%. The bonds pay interest semi-annually on June 30 and December 31. Bond issue costs of $53,000 were incurred. Required – a) Prepare all journal entries relative to this bond issue for the years ended December 31, 20x0 and December 31, 20x1. b) Assume that on July 2, 20x7, Robin repurchases 45% of the bond issue at 105. Prepare the journal entry on July 2, 20x7. Also prepare the journal entry on December 31, 20x7.
On January 1, 20X5, Seymond Corporation issued $100,000 in 10-year, zero-coupon bonds. The interest rate is 5% and Seymond uses the effective interest rate method."A. Record the issuance of the bonds. B. Record the interest accrual on December 31, 20X5. C. Record the interest accrual on December 31, 20X6. "
on 7/2/Y1 Loch Ness, Inc. purchased 50 of the $1,000 face bonds issued by EBerry Corp. Loch Ness paid $1,000 for each bond. The EBerry Corp. bonds were trading at 108 on 12/31/Y1 and at 98 on 12/31/Y2. Loch Ness sold all 50 of the EBerry bonds on 7/1/Y3 for when the market price was 104. They prepare financial statements on December 31st each year. Prepare all the JE needed for Loch Ness's investment in EBerry. Show calculation
Levi Company issued $78,000 of 9% bonds on January 1 of the current year at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1 and mature in 5 years on January 1. The total interest expense related to these bonds for the current year ending on December 31 is a. $3,510 b. $585 c. $7,020 d. $5,265
Levi Company issued $84,000 of 11% bonds on January 1 of the current year at face value. The bonds pay interest semiannually on January 1 and July 1. The bonds are dated January 1 and mature in 5 years on January 1. The total interest expense related to these bonds for the current year ending on December 31 is a. $4,620 b. $770 c. $6,930 d. $9,240
I. Metro Company purchased $500,000, 10%, 5-year bonds on January 1, 20x1, with interest payable on July 1 and January 1. The market interest rate (yield) was 8% for bonds of similar risk and maturity. The market value on December 31, 20x1 was $555,000 and all bonds were sold for $507,500 on January 1, 20x2 after the second payment. Required: compute the bond price on January 1, 20x1, prepare the amortization schedule and record journal entries on January 1, 20x1, July 1, 20x1, December 31, 20x1 and January 1, 20x2 assuming the bond investment is classified as available-for-sale security.
Blue Corporation issued 2,100 $1,000 bonds at 103. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market price of $41.Use the proportional method to record the issuance of the bonds and warrants. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round your answers to 0 decimal places, e.g. 5,125.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
A company issued $400,000 of 7% bonds at 102. One detachable stock warrant entitling the holder to purchase one share of common stock was attached to each $1,000 bond. On the day of this issuance, the bonds without the warrants would sell at 95, the fair value of the warrant was $300 per warrant. How much Discount/Premium on Bonds Payable should be recorded for this issuance? (Just enter an amount. Do not put a plus or minus sign in front of the amount.)
Shurwood Ltd. issued 5,200,000 11%, 10-year, nonconvertible bonds with detachable warrants for $5,340,000. Shortly after issuance, the warrants trade for $314,000 in total, and the bonds were trading at 89, or $5,150,000, ex-warrants (i.e., without warrants attached). Required: 1. Provide the journal entry to record the transactions. 2. Provide the journal entry to record the first payment of interest on the convertible bond assuming that the bonds pay interest annually. Effective interest rate is 11.55%
On January 1, Elias Corporation issued 10% bonds with a face value of $68,000. The bonds are sold for $65,960. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, 10 years from now. Elias records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 of the first year is a. $567 b. $2,040 c. $7,004 d. $6,800

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