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Stonewall Corporation issued $100,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1, 2020. Required a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $625 per share. Use the book value method. • Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. a. Jan. 1, 2020 b. Dec. 31, 2022

Stonewall Corporation issued $100,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1, 2020. Required a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $625 per share. Use the book value method. • Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. a. Jan. 1, 2020 b. Dec. 31, 2022

FINANCIAL ACCOUNTING
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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Stonewall Corporation issued $100,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1, 2020. Required a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide ent onversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the nortized and the common stock was selling at $625 per share. Use the book value method. Cash date of conver Inventory Equipment • Note: List m betical order. Land Deferred Revenue Date Dr. Cr. Bonds Payable Discount on Bonds Payable a. Jan. 1, 2020 Discount and Debt Issuance Costs Premium on Bonds Payable Fair Value Adjustment-Bonds Payable Note Payable Discount on Note Payable Premium on Note Payable Fair Value Adjustment-Note Payable Interest Payable b. Dec. 31, 202 Common Stock Paid-in Capital in Excess of Par-Common Stock Paid-in Capital-Stock Warrants Retained Earnings-Prior Period Adjustment Debt Conversion Expense Previous Next O Interest Expense Loss on Redemption of Bonds Gain on Redemption of Bonds Unrealized Gain or Loss-Income Unrealized Gain or Loss-OCI
Transcribed Image Text:Stonewall Corporation issued $100,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1, 2020. Required a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide ent onversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the nortized and the common stock was selling at $625 per share. Use the book value method. Cash date of conver Inventory Equipment • Note: List m betical order. Land Deferred Revenue Date Dr. Cr. Bonds Payable Discount on Bonds Payable a. Jan. 1, 2020 Discount and Debt Issuance Costs Premium on Bonds Payable Fair Value Adjustment-Bonds Payable Note Payable Discount on Note Payable Premium on Note Payable Fair Value Adjustment-Note Payable Interest Payable b. Dec. 31, 202 Common Stock Paid-in Capital in Excess of Par-Common Stock Paid-in Capital-Stock Warrants Retained Earnings-Prior Period Adjustment Debt Conversion Expense Previous Next O Interest Expense Loss on Redemption of Bonds Gain on Redemption of Bonds Unrealized Gain or Loss-Income Unrealized Gain or Loss-OCI
Stonewall Corporation issued $100,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1, 2020. Required a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $625 per share. Use the book value method. • Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. a. Jan. 1, 2020 b. Dec. 31, 2022
Transcribed Image Text:Stonewall Corporation issued $100,000 of 5%, 10-year convertible bonds. Each $1,000 bond is convertible to 10 shares of common stock (par $50) of Stonewall Corporation. The bonds were sold at 105 on January 1, 2020. Required a. Provide the entry for Stonewall Corporation on January 1, 2020, for the bond issuance. b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately after the end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and the common stock was selling at $625 per share. Use the book value method. • Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. a. Jan. 1, 2020 b. Dec. 31, 2022
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