This preview has intentionally blurred parts. Sign up to view the full document

View Full Document

Unformatted Document Excerpt

BE16-1 Your answer is correct. Archer Inc. issued $4,000,000 par value, 7% convertible bonds at 99 for cash. If the bonds had not included the conversion feature, they would have sold for 95. Prepare the journal entry to record the issuance of the bonds. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Cash Discount on Bonds Payable Bonds Payable BE16-2 Your answer is correct. Petrenko Corporation has outstanding 2,000 $1,000 bonds, each convertible into 50 shares of $10 par value common stock. The bonds are converted on December 31, 2012, when the unamortized discount is $30,000 and the market price of the stock is $21 per share. Record the conversion using the book value approach. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit Bonds Payable 2000000 Common Stock 1000000 Paid-in Capital in Excess of Par 970000 Discount on Bonds Payable 30000 BE16-3 Your answer is correct. Pechstein Corporation issued 2,000 shares of $10 par value common stock upon conversion of 1,000 shares of $50 par value preferred stock. The preferred stock was originally issued at $60 per share. The common stock is trading at $26 per share at the time of conversion. Record the conversion of the preferred stock. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit Preferred Stock 50000 Paid-in Capital in Excess of Par-Preferred 10000 Paid-in Cap. in Excess of Par-Comm. Stock 40000 Common Stock 20000 BE16-4 Your answer is correct. Eisler Corporation issued 2,000 $1,000 bonds at 101. 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 $40. Use the proportional method to record the issuance of the bonds and warrants. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2. Round computations and final answers to 0 decimal places, e.g. 12,510.) Description/Account Cash Discount on Bonds Payable Bonds Payable Paid-in Capital-Stock Warrants BE16-5 Your answer is correct. McIntyre Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. Use the incremental method to record the issuance of the bonds and warrants. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.) Description/Account Debit Credit Cash 2020000 Discount on Bonds Payable 40000 Bonds Payable 2000000 Paid-in Capital - Stock Warrants 60000 BE16-6 Your answer is correct. On January 1, 2012, Barwood Corporation granted 5,000 options to executives. Each option entitles the holder to purchase one share of Barwood's $5 par value common stock at $50 per share at any time during the next 5 years. The market price of the stock is $65 per share on the share at any time during the next 5 years.... View Full Document

End of Preview

Sign up now to access the rest of the document