CH16 - EXERCISE 16-1(15-20 minutes 1 Cash($20,000,000 X.99...

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Unformatted text preview: EXERCISE 16-1 (15-20 minutes} 1. Cash ($20,000,000 X .99) .................................... 19,000,000 Discount on Bonds Payable .............................. 200,000 Bonds Payable ............................................... 20,000,000 Unamortlaed Bond Issue Costs ....................... 70,000 Cash .................................................................. 70,000 2. Cash .......................................................................... 19,500,000 Discount on Bonds Payable .............................. 1,200,000 Bonds Payable ............................................... ii 20,000,000 Paid-in Capital—Stock Warrants ............. 000,000 4‘“) Value oi bonds plus warrants ($20,000,000 it .90} $19,500,000 Value of warrants (200,000 1: $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 .............. 5,945,000" Cash .................................................................. 75,000 *[($1 0,000,000 - $55,000) - $1,005,000] EXERCISE 1 6-10 (Continued) (Note to Instructor: The market price of the stock has no relevance in the prior entry and the following one.) 5f1710 Cash (10,000 X $40} .................................................... 400,000 Paid-in Capital—Stock Options ............................. 150,000 ($450,000 x 10300730300} Common Stock ................................................... 100,000 Paid-in Capital in Excess of Par ................... 450,000 (To record issuance of 10,000 shares of $10 par value stock upon exercise at options at option price of $40) PROBLEM 18-1 (a) 1. Memorandum entry made to indicate the number of rights issued. 2. Cash ............................................................................. 200,000 Discount on Bonds Payable* ............................... 15,385 Bonds Payable ................................................. 200,000 Paid-in Capital—Stock Warrants“ ............ 15,385 *Allocated to Bonds: & = ' $98+ $8 X$200,000 $184,815, Discount = $200,000 — $184,515 = $15,385 *Allocaled to Bonds: $96 = . $9“ $3 X$200,000 $184,515, Discount = $200,000 - $184,615 = $15,385 “Allocated to Warrants: —$3 x on 000 = 1 385 $98 + $3 $2 , $ 5, 3. Cash" ............................................................................ 288,000 Common Stock (9,000 X $10} ...................... 90,000 Paid-in Capital in Excess of Par ................ 198,000 *[(100,000 — 10,000) rights exercised] e (10 rlghtsthare) X $32 = $288,000 4. Paid-in Capital—Stock Warrants ........................ 12,308 (15,385 X 80%) Cash" ............................................................................ 48,000 Common Stock (1 ,600 X $10} ...................... 16,000 Paid-in Capital In Excess 01‘ Par ................ 44,308 “.80 X $200,00018100 per band = 1,800 warrants exercised; 1,600 X $30 = $48,000 ...
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