Chapter_16_Solutions

Chapter_16_Solutions - 16-13SOLUTIONS TO EXERCISESEXERCISE...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 16-13SOLUTIONS TO EXERCISESEXERCISE 16-1 (15–20 minutes)1.Cash ($20,000,000 X .99) ....................................19,800,000Discount on Bonds Payable..............................200,000Bonds Payable...............................................20,000,000Unamortized Bond Issue Costs.......................70,000Cash..................................................................70,0002.Cash ..........................................................................19,600,000Discount on Bonds Payable..............................1,200,000Bonds Payable...............................................20,000,000Paid-in Capital—Stock Warrants.............800,000Value of bondsplus warrants($20,000,000 X .98)$19,600,000Value of warrants(200,000 X $4)800,000Value of bonds$18,800,0003.Debt Conversion Expense.................................75,000Bonds Payable.......................................................10,000,000Discount on Bonds Payable .....................55,000Common Stock..............................................1,000,000Paid-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).....................66,667Interest Expense ($200,000 X 4/6) + $2,712..136,045Discount on Bonds Payable .....................2,712Cash ($4,000,000 X 10% ÷ 2).....................200,000Calculations:Par value$4,000,000Issuance price3,920,000Total discount$ 80,00016-14EXERCISE 16-2 (Continued)Months remaining118Discount per month$678($80,000 ÷ 118)Discount amortized$2,712(4 X $678)(b) Bonds Payable..............................................................1,500,000Discount on Bonds Payable..............................27,458Common Stock (30,000 X $20)..........................600,000Paid-in Capital in Excess of Par.......................872,542**($1,500,000 – $27,458) – $600,000Calculations:Discount related to 3/8 ofthe bonds ($80,000 X 3/8)$30,000Less discount amortized[($30,000 ÷ 118) X 10]2,542Unamortized bond discount$27,458EXERCISE 16-3 (10–20 minutes)Conversion recorded at book value of the bonds:Bonds Payable.......................................................................500,000Premium on Bonds Payable..............................................Premium on Bonds Payable....
View Full Document

This note was uploaded on 06/05/2009 for the course FINANCE 01111 taught by Professor Wu during the Spring '09 term at 東京大学.

Page1 / 7

Chapter_16_Solutions - 16-13SOLUTIONS TO EXERCISESEXERCISE...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online