Class16 - Solutions

Class16 - Solutions - EXERCISE 16-4(a Cash 10,800,000 Bonds...

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EXERCISE 16-4 (a) Cash. ............................................................. 10,800,000 Bonds Payable. ..................................... 10,000,000 Premium on Bonds Payable. ............... 800,000 (To record issuance of $10,000,000 of 8% convertible debentures for $10,800,000. The bonds mature in twenty years, and each $1,000 bond is convertible into five shares of $30 par value common stock) (b) Bonds Payable. ...................................... 3,000,000 Premium on Bonds Payable (Schedule 1) . ..................................... 216,000 Common Stock, $15 par (Schedule 2) . .............................. 450,000 Paid-in Capital in Excess of Par. ... 2,766,000 (To record conversion of 30% of the outstanding 8% convertible debentures after giving effect to the 2-for-1 stock split) Schedule 1 Computation of Unamortized Premium on Bonds Converted Premium on bonds payable on January 1, 2006 $800,000 Amortization for 2006 ($800,000 ÷ 20) $40,000 Amortization for 2007 ($800,000 ÷ 20)
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This note was uploaded on 12/04/2009 for the course MGMT 351 taught by Professor Staff during the Spring '08 term at Purdue.

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Class16 - Solutions - EXERCISE 16-4(a Cash 10,800,000 Bonds...

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