Solutions for Chapter 16 exercises and problems [13th edition]

Intermediate Accounting

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Unformatted text preview: 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 CapitalStock 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 (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 Conversion recorded at book value of the bonds: Bonds Payable.......................................................................................... 400,000 Premium on Bonds Payable..................................................................... 6,000 Preferred Stock (400 X 20 X $50)................................................. 400,000 Paid-in Capital in Excess of Par- Preferred Stock...........................................................................Preferred Stock....
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Solutions for Chapter 16 exercises and problems [13th edition]

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