ch16_sol

# P16 2 entries for conversion amortization and

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P16-2 (Entries for Conversion, Amortization, and Interest of Bonds) Volker Inc. issued Interest has been accrued monthly and paid as due. At the time of conversion any accrued interest on bonds being converted is paid in cash. Note: Due to rounding and significant digits, there may be slight number differences. Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates: (Round to the nearest dollar.) (a) August 1, 2013. (Assume the book value method is used.) (b) August 31, 2013. (c) December 31, 2013, including closing entries for end-of-year.

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0eaa0a329e22b0a9ab0afeb0943e225b5f4c0e17.xlsx, Problem 16-3 Solution, Page 7 of 8, 03/29/2012, 01:32:15 Name: Solution Date: Instructor: Course: provided that 70,000 shares of \$5.00 par value stock be designated as available for the granting of options to officers of the corporation at a price of \$9.00 a share. The market price was \$12.00 a share on November 30, 2012. On January 2, 2012, options to purchase 28,000 shares were granted to president Tom Winter - 15,000 for services rendered in 2012 and 13,000 for services to be rendered in 2013. Also on that date, options to purchase 14,000 shares were granted to vice president Michelle Bennett - 7,000 for services to be rendered in 2012 and 7,000 for services to be rendered in 2013. The market value of the stock was \$14 a share on January 2, 2012. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was \$4 per option. In 2013 neither the president nor the vice president exercised their options because the market price of the stock was below the exercise price. The market value of the stock was \$8 a share on December 31, 2013, when the options for 2012 services lapsed. On December 31, 2014, both president Winter and vice president Bennett exercised their options for 13,000 and 7,000 shares, respectively, when the market price was \$16 a share. Instructions: Jan 2, 12 No entry Dec 31, 12 Compensation Expense (\$4.00 per share × 22,000 sh) 88,000 Paid-in Capital—Stock Options 88,000 (To record compensation expense attributable to 2012—22,000 options at \$4) Dec 31, 13 Compensation Expense (\$4.00 per share × 20,000 sh) 80,000 Paid-in Capital—Stock Options 80,000 (To record compensation expense attributable to 2013—20,000 options at \$4) Dec 31, 13 Paid-in Capital—Stock Options 88,000 Paid-in Capital from Expired Stock Options 88,000 (To record lapse of president’s and vice president’s options to buy 22,000 shares) Dec 31, 14 Cash (\$9.00 × 20,000 shares) 180,000 Paid-in Capital—Stock Options (\$4.00 × 20,000) 80,000 Common Stock (\$5.00 par value × 20,000 shares) 100,000 Paid-in Capital in Excess of Par 160,000 Intermediate Accounting , 14 th Edition by Kieso, Weygandt, and Warfield Primer on Using Excel in Accounting by Rex A Schildhouse P16-3 (Stock-Option Plan) Berg Company adopted a stock-option plan on November 30, 2011, that Prepare the necessary journal entries in 2011 when the stock-option plan was adopted, in 2012 when options were granted, in 2013 when options lapsed, and in 2014 when options were exercised.
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