ch16HWSolutions - CHAPTER 16 Dilutive Securities and...

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Unformatted text preview: CHAPTER 16 Dilutive Securities and Earnings Per Share SOLUTIONS TO EXERCISES EXERCISE 16-8 JACOB COMPANY Journal Entry September 1, 2010 Cash ($3,120,000 + $60,000 $30,000).................... 3,150,000 Unamortized Bond Issue Costs............................... 30,000 Bonds Payable (3,000 X $1,000)....................... 3,000,000 Premium on Bonds PayableSchedule 1....... 102,000 Paid-in CapitalStock Warrants Schedule 1...................................................... 18,000 Bond Interest ExpenseSchedule 2............... 60,000 (To record the issuance of the bonds) Schedule 1 Premium on Bonds Payable and Value of Stock Warrants Sales price (3,000 X $1,040)....................................................... $3,120,000 Face value of bonds.................................................................... 3,000,000 120,000 Deduct value assigned to stock warrants (3,000 X 2 = 6,000; 6,000 X $3).................................................. 18,000 Premium on bonds payable....................................................... $ 102,000 Schedule 2 Accrued Bond Interest to Date of Sale Face value of bonds.................................................................... $3,000,000 Interest rate.................................................................................. 8% Annual interest............................................................................ $ 240,000 Accrued interest for 3 months ($240,000 X 3/12).................. $ 60,000 EXERCISE 16-15 (a)........................................... 2,640,000 shares Jan. 1, 2010Sept. 30, 2010 (2,400,000 X 9/12).................... 1,800,000 Retroactive adjustment for stock dividend............. X 1.10 Jan. 1, 2010Sept. 30, 2010, as adjusted................. 1,980,000 Oct. 1, 2010Dec. 31, 2010 (2,640,000 X 3/12).......... 660,000 2,640,000 Another way to view this transaction is that the 2,400,000 shares at the beginning of the year must be restated for the stock dividend regardless of where in the year the stock dividend occurs....
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This note was uploaded on 04/14/2010 for the course TOBIN 630 taught by Professor Alan during the Fall '10 term at Adams State University.

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ch16HWSolutions - CHAPTER 16 Dilutive Securities and...

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