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- Hannon Home Products Inc. recently issued $2.8 million worth of 6 percent convertible debentures. Each convertible bond has a face value of $1,000. Each convertible bond can be converted into 21.3 shares of common stock anytime before maturity. The stock price is $37.95, and the market value of each bond is $1,150. (Do not round intermediate calculations. Round the answers to 2 decimal places. Omit $ sign in your response.) a. What is the conversion ratio? Conversion ratio 21.30 b. What is the conversion price? Conversion price $46.95 c. What is the conversion premium? Conversion premium 34.17 % d. What is the conversion value? Conversion value $808.34 e. If the stock price increases by $1, what is the new conversion value? Conversion value $ 829.64For each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Martinez Corp. issued $21,300,000par value 10% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Sandhill Company issued $21,300,000par value10% bonds at97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $5. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 11%, $10,200,000par value bonds were converted into 1,020,000shares of $1 par value common stock on July 1, 2020. On July 1, there was $59,000of unamortized discount applicable to the bonds, and the company paid an additional $69.000to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (Credit account titles…Can you help explain the computations on this problem: E. Corp issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrent. After issuance, the bonds were selling in the market at 98, and the warrents had a market price of $40. Use the proportional method to record the issuance of bonds and warrents. Thanks,
- For each of the unrelated transactions described below, present the entries required to record each transaction. P 1. 2. 3. Waterway Corp. issued $18,700,000 par value 9% convertible bonds at 99. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Wildhorse Company issued $18,700,000 par value 9% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 10%, $9,400,000 par value bonds were converted into 940,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $54,000 of unamortized discount applicable to the bonds, and the company paid an additional $71,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…II. Read each statement carefully. Identify the following whether it is a "BOND" OR "STOCK". Check ( /) the appropriate box. BOND STOCK If a company has 10, 000 shares of stock outstanding and one person owns 1, 000 shares, that person would own and have claim to 10% of the company's assets and earnings. If current interest rates are 5% lower than your rate on a mortgage on which you have 4 years left to pay, it's going to matter much less than it would for someone who has 20 years of mortgage payments left. You might buy a 10 year, 10,000 bond paying 5% interest. The issuer,in exchange, will promise to pay you interest on that 7,500 every six months and then return your 10,000 after 10 years. A blue chip stocks are stocks issued by high quality, large companies and generally have steady dividend. 1. 2. 3. 4. 5. It offer an ownership stake in the company and considered riskier and more volatile.For each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Vaughn Corp. issued $21,600,000 par value 11% convertible bonds at 97. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Bramble Company issued $21,600,000 par value 11% bonds at 96. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 1. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 12%, $10,900,000 par value bonds were converted into 1,090,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $55,000 of unamortized discount applicable to the bonds, and the company paid an additional $78,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…
- For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Splish Corp. issued $19,300,000 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. 2. Blossom Company issued $19,300,000 par value 10% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 11%, $9,700,000 par value bonds were converted into 970,000 shares of $1 par value common stock on July 1, 2020. On July 1, there was $56,000 of unamortized discount applicable to the bonds, and the company paid an additional $79,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.…For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Blossom Corp, issued $18,900,000 par value 9% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. 2. Blue Company issued $18,900,000 par value 9% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 10%, $10,800,000 par value bonds were converted into 1,080,000 shares of $ 1 par value common stock on July 1, 2020. On July 1, there was $60,000 of unamortized discount applicable to the bonds, and the company paid an additional $69,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.Your answer is partially correct. Eisler Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market price of $40. Use the proportional method to record the issuance of the bonds and warrants. (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 O for the amounts. Round your answers to O decimal places, e.g. 5,125.) Account Titles and Explanation Cash Discount on Bonds Payable Bonds Payable Paid-in Capital-Stock Warrants Debit 2020000 Credit 2000000 78780
- What is the correct choice? A bond issue of $50,000 with a carrying value of $49,000 is converted into $10 par value common stock at the rate of fifty shares for each $1,000 bond. The entry to be recorded on the conversion of bonds is: a. Bonds Payable 50,000 Loss on Retirement of Bonds 1,000 Unamortised Bond Discount 1,000 Common Stock 51,000 b. Bonds Payable 50,000 Common Stock 25,000 Additional Paid-In Capital 25,000 c. Bonds Payable 50,000 Common Stock 25,000 Additional Paid-In Capital 24,000 Unamortised Bond Discount 1,000 d. Bonds Payable 49,000…For each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Concord Corp. issued $20,100,000 par value 10% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Marigold Company issued $20,100,000 par value 10% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 11%, $9,100,000 par value bonds were converted into 910,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $60,000 of unamortized discount applicable to the bonds, and the company paid an additional $81,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…Hilton Hotels Corporation has a convertible bond issue outstanding. Each bond, with a face value of $1,200, can be converted into common shares at a rate of 61.2999 shares of stock per $1,200 face value bond (the conversion rate), or $19.5759 per share. Hilton's common stock is trading (on the NYSE) at $19.16 per share and the bonds are trading at $1,175. a. Calculate the conversion value of each bond. (Round your answer to 2 decimal places. (e.g., 32.16)) b. State whether it is currently profitable for bond holders to convert their bonds into shares of Hilton Hotels common stock. Conversion value b. Exercise the conversion option a.