Kieso+13th+ed+sol+ch+16

Kieso+13th+ed+sol+ch+16 - EXERCISE 16-1 (1520 minutes) 1....

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EXERCISE 16-1 (15–20 minutes) 1. Cash ($10,000,000 X .99). ................................................... 9,900,000 Discount on Bonds Payable. ............................................. 100,000 Bonds Payable. .......................................................... 10,000,000 Unamortized Bond Issue Costs. ........................................ 70,000 Cash. ........................................................................... 70,000 2. Cash. .................................................................... 9,800,000 Discount on Bonds Payable. ............................................. 600,000 Bonds Payable. .......................................................... 10,000,000 Paid-in Capital—Stock Warrants. ............................. 400,000 Value of bonds plus warrants ($10,000,000 X .98) $9,800,000 Value of warrants (100,000 X $4) 400,000 Value of bonds $9,400,000 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)
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(a) Interest Payable ($150,000 X 2/6). ..................................... 50,000 Interest Expense ($150,000 X 4/6) + $2,032. ........................ 102,032 Discount on Bonds Payable. .................................... 2,032 Cash ($3,000,000 X 10% ÷ 2). .................................... 150,000 Calculations: Par value $3,000,000 Issuance price 2,940,000 Total discount $ 60,000 EXERCISE 16-2 (Continued) Months remaining 118 Discount per month ($60,000 ÷ 118) $508 Discount amortized (4 X $508) $2,032 (b) Bonds Payable. ........................................................................... 1,000,000 Discount on Bonds Payable. ............................................. 18,305 Common Stock (30,000 X $20). .......................................... 600,000 Paid-in Capital in Excess of Par. ....................................... 381,695* *($1,000,000 – $18,305) – $600,000 Calculations: Discount related to 1/3 of the bonds ($60,000 X 1/3) $20,000 Less: Discount amortized [($60,000 ÷ 118) X 10 X 1/3] 1,695 Unamortized bond discount $18,305 EXERCISE 16-3 (10–15 minutes) Conversion recorded at book value of the bonds:
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Bonds Payable. ..................................................................................... 400,000 Premium on Bonds Payable. ............................................................... 6,000 Preferred Stock (400 X 20 X $50). .............................................. 400,000
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This note was uploaded on 01/28/2011 for the course ACC 3342 taught by Professor Dorata during the Spring '10 term at St. John's.

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Kieso+13th+ed+sol+ch+16 - EXERCISE 16-1 (1520 minutes) 1....

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