California, Inc. had outstanding 10%, P1 million face value, convertible bonds maturing on December 31, 2022 on which interest is paid June 30 and December 31. After amortization through June 30, 2020, the unamortized balance in the bond discount account was P30,000. premium from bond conversion privilege had a balance of P50,000. On that date, all of these bonds were converted into 40,000 ordinary shares with P20 par value. At that time, each share of California ordinary share capital sells for P23. California incurred expenses of P10,000 in connection with the conversion. The share The conversion of the bonds to ordinary shares shall result to an increase in share premium by P160,000 P170,000 P180,000 P210,000 a. b. с. d. Use the same information given in MC38. conversion in accordance with current financial reporting standards, California should record gain on conversion of Recording the P60,000 P50,000 P40,000 PO a. b. с. d.

California, Inc. had outstanding 10%, P1 million face value, convertible bonds maturing on December 31, 2022 on which interest is paid June 30 and December 31. After amortization through June 30, 2020, the unamortized balance in the bond discount account was P30,000. premium from bond conversion privilege had a balance of P50,000. On that date, all of these bonds were converted into 40,000 ordinary shares with P20 par value. At that time, each share of California ordinary share capital sells for P23. California incurred expenses of P10,000 in connection with the conversion. The share The conversion of the bonds to ordinary shares shall result to an increase in share premium by P160,000 P170,000 P180,000 P210,000 a. b. с. d. Use the same information given in MC38. conversion in accordance with current financial reporting standards, California should record gain on conversion of Recording the P60,000 P50,000 P40,000 PO a. b. с. d.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 7P: Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued...

See similar textbooks

Similar questions

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?
Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortization
Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?