ch16_sol - Name: Solution Date: Instructor: Course:...

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0eaa0a329e22b0a9ab0afeb0943e225b5f4c0e17.xlsx, Exercise 16-1 Solution, Page 1 of 8, 03/29/2012, 01:32:14 Name: Solution Date: Instructor: Course: 1. Coyle Corp. issued $10,000,000 par value 10% convertible bonds at 99 If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95 Expenses of issuing the bonds were $70,000 Cash ($10,000,000 × 0.99) 9,900,000 Discount on Bonds Payable 100,000 Bonds Payable 10,000,000 Unamortized Bond Issue Costs 70,000 Cash 70,000 2. Lambert Company issued $10,000,000 par value 10% bonds at 98 One detachable stock warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4 Cash ($10,000,000 × 0.98) 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 × 0.98) $9,800,000 Value of warrants ($4.00 × 100,000 shares) 400,000 Value of bonds $9,400,000 The 11% $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on July 1, 2012. On July 1, there was $55,000 of unamortized discount applicable to the bonds, and the company paid an additional $75,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. 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) Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse E16-1 (Issuance and Conversion of Bonds) Instructions: For each of the unrelated transactions described below, present the entry(ies) required to record each transaction. 3. Sepracor, Inc. called its convertible debt in 2012. Assume the following related to the transaction:
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0eaa0a329e22b0a9ab0afeb0943e225b5f4c0e17.xlsx, Exercise 16-1, Page 2 of 8, 03/29/2012, 01:32:14 Name: Date: Instructor: Course: 1. Coyle Corp. issued $10,000,000 par value 10% convertible bonds at 99 If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95 Expenses of issuing the bonds were $70,000 Account Title Amount Account Title Amount Account Title Amount Account Title Amount Account Title Amount 2. Lambert Company issued $10,000,000 par value 10% bonds at 98 One detachable stock warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4 Account Title Amount Account Title Amount Account Title Amount Account Title Amount Text title Formula Text title Formula Text title Formula The 11% $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on July 1, 2012. On July 1, there was $55,000 of unamortized discount applicable to the bonds, and the company paid an additional $75,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. Account Title Amount Account Title Amount Account Title Amount Account Title Amount Account Title Formula Account Title Amount * Calculation as desired.
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ch16_sol - Name: Solution Date: Instructor: Course:...

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