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CH 16 Solutions(1) - EXERCISE 16-1 1 9,900,000 100,000...

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EXERCISE 16-1 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 16-7 (a) $136,000 X $150,000 = $127,500 Value assigned to bonds $136,000 + $24,000 $24,000
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X $150,000 = $22,500 $150,000 Value assigned to warrants Total $136,000 + $24,000 Cash ............................................................... 150,000 Discount on Bonds Payable .................................. 47,500 Bonds Payable ................................................... 175,000 Paid-in Capital—Stock Warrants ........................ 22,500 (b) When the warrants are non-detachable, separate recognition is not given to the warrants. Cash ........................................................................... 150,000 Discount on Bonds Payable ....................................... 25,000 Bonds Payable ................................................... 175,000 EXERCISE 16-11 1/1/10 No entry (total compensation cost is $400,000) 12/31/10 Compensation Expense ........................................ 200,000 Paid-in Capital—Stock Options ................. 200,000 ($400,000 X 1/2) (To recognize compensation expense for 2010) 4/1/11 Paid-in Capital—Stock Options ............................. 30,000 Compensation Expense ($200,000 X 3,000/20,000) .....................
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