ACCT 5010-INT II-HW-CH 16

ACCT 5010-INT II-HW-CH 16 - CHAPTER 16 EXERCISE 16-1(15-20...

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CHAPTER 16 EXERCISE 16-1 (15-20 minutes) 1. Cash ($20,000,000 X .99). ..................................................... 19,800,000 Discount on Bonds Payable. .................................................. 200,000 Bonds Payable. .............................................................. 20,000,000 Unamortized Bond Issue Costs. ............................................. 70,000 Cash. .............................................................................. 70,000 2. Cash . .................................................................... 19,600,000 Discount on Bonds Payable. .................................................. 1,200,000 Bonds Payable. .............................................................. 20,000,000 Paid-in Capital—Stock Warrants. ................................. 800,000 Value of bonds plus warrants ($20,000,000 X .98) $19,600,000 Value of warrants (200,000 X $4) 800,000 Value of bonds $18,800,000 3. Debt Conversion Expense. ..................................................... 75,000 Bonds Payable. ....................................................................... 10,000,000 Discount on Bonds Payable. ......................................... 55,000 Common Stock. ............................................................. 1,000,000 Paid-in Capital in Excess of Par. ................................... 8,945,000* Cash. .............................................................................. 75,000 *[($10,000,000 – $55,000) – $1,000,000] EXERCISE 16-2 (15-20 minutes) (a) Interest Payable ($200,000 X 2/6). ........................................ 66,667 Interest Expense ($200,000 X 4/6) + $2,712. ........................ 136,045 Discount on Bonds Payable. ......................................... 2,712 Cash ($4,000,000 X 10% ÷ 2). ..................................... 200,000 Calculations: Par value $4,000,000 Issuance price 3,920,000 Total discount $ 80,000 Months remaining 118 16-1
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Discount per month $678 ($80,000 ÷ 118) Discount amortized $2,712 (4 X $678) (b) Bonds Payable. ............................................................................... 1,500,000 Discount on Bonds Payable. .................................................. 27,458 Common Stock (30,000 X $20). ............................................ 600,000 Paid-in Capital in Excess of Par. ............................................ 872,542* *($1,500,000 – $27,458) – $600,000 Calculations: Discount related to 3/8 of the bonds ($80,000 X 3/8) $30,000 Less discount amortized [($30,000 ÷ 118) X 10] 2,542 Unamortized bond discount $27,458 EXERCISE 16-3 (10-20 minutes) Conversion recorded at book value of the bonds: Bonds Payable. ......................................................................................... 500,000 Premium on Bonds Payable. .................................................................... 7,500 Preferred Stock (500 X 20 X $50). ................................................ 500,000 Paid-in Capital in Excess of Par
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ACCT 5010-INT II-HW-CH 16 - CHAPTER 16 EXERCISE 16-1(15-20...

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