On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face value convertible bonds at 110. Each P 5,000 bond is convertible into 10 shares of P 100 par value ordinary shares on the date of maturity. Without the conversion feature, the bonds can be sold at 105. 1. What if before maturity date, bond conversion privilege is fully exercised?
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On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face
1. What if before maturity date, bond conversion privilege is fully exercised?
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- On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?1. On November 16, 2020, Bilbond issued its 10-year, 7% P1,000,000 convertible bonds at 122. The bonds would have sold for P1,154,435 without the conversion feature. The effective interest rate of similar bonds without the conversion feature is 5%. QUESTION: What is the increase in equity on the date of issuance? 2. On January 1, 2020, Kabond issued a 3- year bond with conversion feature, 9% P1,000,000 at par. Without the conversion feature, the bonds would have sold for 89. Interest is payable semi-annually every June 30 and December 31. On May 30, 2021 the bonds were retired for P1,030,000. At retirement date, the bonds were selling at 91 without the conversion feature. QUESTION: How much was the reduction in the bond conversion privilege at retirement date?
- On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face value convertible bonds at 110. Each P 5,000 bond is convertible into 10 shares of P 100 par value ordinary shares on the date of maturity. Without the conversion feature, the bonds can be sold at 105. What if before maturity date, bond conversion privilege is partially exercised( 40% of the BCP)? Provide the journal entries for each problems and assumptionsLord Corporation acquired bonds with a face value of P3,000,000 for P2,800,000 on January 1, 2020. The bond has a stated interest of 10%, pays interest every December 31, and matures on December 31, 2022. Requirements:1. Prepare the necessary journal entries to record the above transactions.2. How much is the investment in bonds on December 31, 2020?3. Assuming that the bond is a serial bond and the P1,000,000 matures every December 31. Prepare the journal entries to record the transactions.4. The same information in No. 3, how much is the investment in bonds on December 31, 2020?On January 1, 2023, Culver Corp. purchased at par 12% bonds with a maturity value of $309,000. They are dated January 1, 2023, and mature on January 1, 2028, with interest receivable on December 31 of each year. The bonds are accounted for using the amortized cost model, Prepare the journal entry to record the bond purchase. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry) Date Jan. 1. 2023 Date Account Titles and Explanation Dec. 31. 2023 Prepare the journal entry to record the interest received for 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts List debit entry before credit entry) Debit Account Titles and Explanation Credit Debit Credit
- On November 16, 2020, Bilbond issued its 10-year, 7% P1,000,000 convertible bonds at 122. The bonds would have sold for P1,154,435 without the conversion feature. The effective interest rate of similar bonds without the conversion feature is 5%. What is the increase in equity on the date of issuance?For each of the unrelated transactions described below, present the entry required to record the bond transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) 1. On August 1, 2021, Wildhorse Corporation called its 10% convertible bonds for conversion. The $6,600,000 par bonds were converted into 264,000 shares of $20 par common stock. On August 1, there was $660,000 of unamortized premium applicable to the bonds. The fair value of the common stock was $20 per share. Ignore all interest payments.2. Sandhill, Inc. decides to issue convertible bonds instead of common stock. The company issues 10% convertible bonds, par $2,900,000, at 97. The investment banker indicates that if the bonds had not been convertible they would have sold at 94.3. Gomez Company issues $7,800,000 of bonds with a coupon…On 1 July 2022, SFU Co issued a convertible bond at par value of $20 million and has recordedit as a non-current liability. The bond is redeemable for cash on 30 June 2024 at par. Bondholderscan however, opt for the conversion in the form of a fixed number of shares. Interest on the bondis payable at a rate of 4% a year in arrears. The interest paid in the year has been presented asfinance cost. The interest rate on similar debt without a conversion option is 10%, with a presentvalue of $17,91 million at 1 July 2022. Discuss how the convertible bonds should be accounted for during the 2023 financialperiod. Please also show the calculations for my understanding
- The Gonzalez Group issued $830,000 of 9% bonds on June 30, 2024, for $912,141. • The bonds were dated on June 30 and mature on June 30, 2044 (20 years). • The market yield for bonds of similar risk and maturity is 8%. • Interest is paid semiannually on December 31 and June 30. Required: 1. to 3. Prepare the journal entries to record their issuance by The Gonzalez Group on June 30, 2024, interest on December 31, 2024 and interest on June 30, 2025 (at the effective rate). Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list Journal entry worksheet 1 2 3 Record the issuance of the bond on June 30, 2024. Date June 30, 2024 Note: Enter debits before credits. General Journal Debit CreditStinson Corporation issued $600,000 of 7%, 10-year bonds payable on March 31, 2022. The market interest rate at the date of issuance was 9%, and the bonds pay interest semiannualy. St Corporation's year-end is March 31. Read the requirements. 1. Using the PV function in Excel, The issue price of the bonds is Requirements 1. Using the PV function in Excel, calculate the issue price of the bonds 2. Prepare an effective-interest amortization table for the bonds through the first three interest payments. Round amounts to the nearest dollar 3. Record Stinson Corporation's issuance of the bonds on March 31, 2022, and payment of the first semiannual interest amount and amortization of the bond discount on September 30, 2022 Explanations are not required Print Done X Clear all Check answerCOMPOUND FINANCIAL INSTRUMENTS On January 1, 2023, ACT Company issued 1,000 of its 10%, 5-year, P 5,000 face value convertible bonds at 110. Each P 5,000 bond is convertible into 10 shares of P 100 par value ordinary shares on the date of maturity. Without the conversion feature, the bonds can be sold at 105. 1. What if before maturity date, bond conversion privilege is fully exercised? 2. What if before maturity date, bond conversion privilege is partially exercised( 40% of the BCP)? Provide the journal entries for each problems and assumptions