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Business Accounting FINANCIAL ACCT-CONNECT

1. To identify: The items that make up A company’s long-term debts as reported on its balance sheet at September 27, 2014 Given info: Referring to the financial statements of A company in appendix A. Total long-term debts as reported on its balance sheet at September 27, 2014 = $28,987 million Long-term debts: The debts that the company has borrowed for more than 1 year and such debts are usually obtained by issuing bonds and debentures. A company’slong-term debts as reported on its balance sheet at September 27, 2014 includes floating- and fixed-rate notes in which some of the Floating-rate notes are due in 2016, 2017, 2018 and 2019, some of the fixed-rate notes are due in 2016, 2017 and some are even in the year 2043 and 2044. Total long-term debts as reported on its balance sheet at September 27, 2014 = $28,987 million 2. To determine: The amount of annual cash interest to be paid on the convertible debentures by assuming A company has $100 million in convertible debentures that carry a 4.25% contract rate of interest Given info: Referring to the financial statements of A company in appendix A. The total interest that A company has to pay every year irrespective of the profit and losses = $4,250,000 Amount of convertible debentures A company has = $100 million Rate of interest = 4.25% Therefore, Interest = Debentures × Rate of interest = $100 million×4.25% = $4,250,000 Therefore, the total interest that A company has to pay every year irrespective of the profit and losses = $4,250,000 3. To prepare: Journal entry upon the conversion of $100 million of convertible bonds into 20,000 shares Given info: Referring to the financial statements of A company in appendix A A company’s total of accrued expenses for the year ended 2014 = $18,453 million Convertible bonds or debentures are those bonds which can be converted into shares. A company’s Journal entry upon the conversion of $100 million of convertible bonds into 20,000 shares Date Particulars L.F. Debit ($) Credit ($) Jan 1 Bonds Payable Dr. 100 million To Common Stock 100 million At the time of conversion, amount will be debited from the Bonds payableand will be credited to the common stock. 4. To determine: The additional long-term debt issued by A company since the year ended September 27, 2014 Given info: Referring to the financial statements of A company in appendix A The additional long-term debt issued by A companyin the year 2015 are as follows: First quarter 2015 euro-denominated debt issuance of €2.8 billion Second quarter 2015 debt issuance of $6.5 billion Second quarter 2015 Swiss franc-denominated debt issuance of SFr1.25 billion Third quarter 2015 debt issuance of $8.0 billion Third quarter 2015 Japanese yen-denominated debt issuance of ¥250.0 billion Fourth quarter 2015 British pound-denominated debt issuance of £1.25 billion Fourth quarter 2015 Australian dollar-denominated debt issuance of A$2.25 billion Fourth quarter 2015 euro-denominated debt issuance of €2.0 billion

1. To identify: The items that make up A company’s long-term debts as reported on its balance sheet at September 27, 2014 Given info: Referring to the financial statements of A company in appendix A. Total long-term debts as reported on its balance sheet at September 27, 2014 = $28,987 million Long-term debts: The debts that the company has borrowed for more than 1 year and such debts are usually obtained by issuing bonds and debentures. A company’slong-term debts as reported on its balance sheet at September 27, 2014 includes floating- and fixed-rate notes in which some of the Floating-rate notes are due in 2016, 2017, 2018 and 2019, some of the fixed-rate notes are due in 2016, 2017 and some are even in the year 2043 and 2044. Total long-term debts as reported on its balance sheet at September 27, 2014 = $28,987 million 2. To determine: The amount of annual cash interest to be paid on the convertible debentures by assuming A company has $100 million in convertible debentures that carry a 4.25% contract rate of interest Given info: Referring to the financial statements of A company in appendix A. The total interest that A company has to pay every year irrespective of the profit and losses = $4,250,000 Amount of convertible debentures A company has = $100 million Rate of interest = 4.25% Therefore, Interest = Debentures × Rate of interest = $100 million×4.25% = $4,250,000 Therefore, the total interest that A company has to pay every year irrespective of the profit and losses = $4,250,000 3. To prepare: Journal entry upon the conversion of $100 million of convertible bonds into 20,000 shares Given info: Referring to the financial statements of A company in appendix A A company’s total of accrued expenses for the year ended 2014 = $18,453 million Convertible bonds or debentures are those bonds which can be converted into shares. A company’s Journal entry upon the conversion of $100 million of convertible bonds into 20,000 shares Date Particulars L.F. Debit ($) Credit ($) Jan 1 Bonds Payable Dr. 100 million To Common Stock 100 million At the time of conversion, amount will be debited from the Bonds payableand will be credited to the common stock. 4. To determine: The additional long-term debt issued by A company since the year ended September 27, 2014 Given info: Referring to the financial statements of A company in appendix A The additional long-term debt issued by A companyin the year 2015 are as follows: First quarter 2015 euro-denominated debt issuance of €2.8 billion Second quarter 2015 debt issuance of $6.5 billion Second quarter 2015 Swiss franc-denominated debt issuance of SFr1.25 billion Third quarter 2015 debt issuance of $8.0 billion Third quarter 2015 Japanese yen-denominated debt issuance of ¥250.0 billion Fourth quarter 2015 British pound-denominated debt issuance of £1.25 billion Fourth quarter 2015 Australian dollar-denominated debt issuance of A$2.25 billion Fourth quarter 2015 euro-denominated debt issuance of €2.0 billion

Solution Summary: The author identifies the items that make up A company's long-term debts as reported on its balance sheet at September 27, 2014. The amount of annual cash interest to be paid on convertible debentures is calculated based on

FINANCIAL ACCT-CONNECT

FINANCIAL ACCT-CONNECT

8th Edition

ISBN: 9781266627903

Author: Wild

Publisher: INTER MCG

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