Stonewall Corporation issued $12,000 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. a. Provide the entry for Stonewall Corporation on January 1 for the bond issuance.DateJan. 1Account NameDateDec. 31To record bond issuance.Account NameDebitTo record bond conversion.OOO000b. Provide entries for Stonewall Corporation assuming that the conversion privilege is subsequently exercised immediately afterthe end of the third year. Assume that at the date of conversion, 30% of any premium or discount has been amortized and thecommon stock was selling at $125 per share. Use the book value method.DebitOOOOCredit0OOO00CreditOOOO000

Bonds: Bonds are fixed income earning instruments where the investor lends money to the company in…

Stonewall Corporation issued $12,000 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.

Stonewall Corporation issued $12,000 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Hoosier Company issued $20,000,000 par value 10% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4 Present the entries required to record the transaction
Hoffman Corporation issued $60 million of 5%, 20-year bonds at 102. Each of the 60,000 bonds was convertible into one share of $1 par common stock. Prepare the journal entry to record the issuance of the bonds.
On July 1, 2020, Tuttle Company had bonds payable outstanding with a face value of $100,000 and a book value of $93,000. The interest on these bonds was paid on June 30. When these bonds were issued, each $1,000 bond was convertible into 25 shares of $10 par common stock. To induce conversion, on June 15, 2020, the terms were changed so that each bond was convertible into 28 shares of common stock if the conversion was made within 30 days. All the bonds were converted on July 1, 2020, when the market price of the common stock was $42 per share. Required: Next Level Using the book value method, record the conversion of the bonds on July 1, 2020. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5
Mills Corp. (MC) prepares its statements in accordance with IFRS. On January 1, 2021, MC issued 1,000 seven-year, 5% convertible bonds with a face value of $1,000. Interest is paid annually on the bonds on December 31. Each $1,000 bond is convertible into 35 common shares, which are currently trading at $34 per share. Similar bonds without conversion features carry an interest rate of 7%. The bonds were issued at 94. Required: Calculate the amount to be allocated to the bond and the options, and record the journal entry at the date of issuance. Assume that after six years, when the carrying amount of the bonds is $981,308, the holders of the convertible bond decide to convert their bonds before the bond maturity date. Prepare the journal entry to record the conversion. How many shares were issued at the conversion?
Nordbock Inc. reports the following outstanding bond issue on its December 31, 20Y1,balance sheet: $1,000,000, 7%, 10-year bonds that pay interest semiannually. The bonds have been outstanding for five years and were originally issued at face amount. The company is considering redeeming these bonds on January 1, 20Y2, at 103 and issuing new $1,000,000, 5%, five-year bonds at their face amount. These bonds would pay interest semiannually on June 30 and December 31. Write a brief memo to Liz Nolan, the chief financial officer, discussing the costs of redeeming the existing bonds, the proceeds from issuing the new bonds, and whether this is a good financial decision.
Wildhorse, Inc. had outstanding $5,820,000 of 10% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $9,240,000 of 11%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 10% bonds (with unamortized discount of $58,200) at 101 on August 1. Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds. (Round answers to O decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date July 1 August 1 Account Titles and Explanation (To record issuance of 11% bonds) (To record retirement of 10% bonds) Debit Credit F
Kk.342.
Blossom Corporation sold 160 convertible, 10-year bonds at par for $160,000. Each bond pays 3% annual interest and each bond can be converted to ten common shares at the bondholder's request. When the bonds were issued common shares were trading for $14 per share. The market rate of interest for similar bonds without conversion rights was 5%. Prepare the journal entry to record the issuance of the bonds. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Cash Contributed Surplus - Stock Options Bonds Payable Debit Credit 160,000
Haresh
On January 1, 2018, Denver Services issued $20,000 of 8% bonds that mature in five years. The bonds were issued for $19,000. Prepare the journal entry to issue bonds. Omit explanation
Splish Corporation issued 4,000, five year, 4% bonds at 106 on January 1, 2023. Interest is paid annually. Each $1,000 bond carried one detachable warrant allowing the holder to purchase 100 common shares in Splish at $11 per share, the price at which Splish shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 5%. On June 30, 2023, 800 of the bond holders exercised the options to buy the shares. Prepare the journal entries to record these events. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List all debit entries before credit entries.) Date ary 1, 2023 0, 2023 Account Titles and Explanation…
Haresh