Wildhorse Corp. offers three-year, 6% convertible bonds (par $1,120). Each $1,120 bond may be converted into 265 common shares, which are currently trading at $3 per share. Similar straight bonds carry an interest rate of 9%. 1,000 bonds are issued at par. Prepare the journal entries at the date of issuance under both IFRS and ASPE. Assume further that the company chooses to value the equity component at $0 under ASPE. (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 all debit entries before credit entries. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971.) Account Titles IFRS ASPE Debit Credit

Wildhorse Corp. offers three-year, 6% convertible bonds (par $1,120). Each $1,120 bond may be converted into 265 common shares, which are currently trading at $3 per share. Similar straight bonds carry an interest rate of 9%. 1,000 bonds are issued at par. Prepare the journal entries at the date of issuance under both IFRS and ASPE. Assume further that the company chooses to value the equity component at $0 under ASPE. (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 all debit entries before credit entries. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971.) Account Titles IFRS ASPE Debit Credit

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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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?
Enviro Company issues 12.00%, 10-year bonds with a par value of $460,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 9.00%, which implies a selling price of 128.625. The straight-line method is used to allocate interest expense. What are the issuer's cash proceeds from issuance of these bonds? What total amount of bond interest expense will be recognized over the life of these bonds? What is the amount of bond interest expense recorded on the first interest payment date?
On January 1, 2020, Blossom Ltd. issued 820 5-year, 11% convertible bonds at par of $1,000, with interest payable each December 31. Each bond is convertible into 100 common shares, and the current fair value of each common share is $6. Similar straight bonds carry an interest rate of 13%. Calculate the PV of the debt component by itself. Calculate using any of the following methods: (1) factor tables, (2) a financial calculator, or (3) Excel function PV. QUESTION: 1) PV of the debt component 2) How should Blossom record the issuance if it follows IFRS? Use the amount you arrived at in part (a) using a financial calculator or Excel. Date Account Titles and Explanation January 1 enter an account title enter an account title January 1 enter an account title Date Account Titles and Explanation enter an account title Debit 3) How should Blossom record the issuance if it follows ASPE? enter an account title enter a debit amount enter a credit amount Credit enter a debit amount enter a credit…
Garcia Company issues 8.0%, 15-year bonds with a par value of $290,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6.0%, which implies a selling price of 114 3/4. Prepare the journal entry for the issuance of these bonds for cash on January 1. View transaction list Journal entry worksheet < Record the issue of bonds with a par value of $290,000 at a selling price of 114 3/4. Note: Enter debits before credits. Date January 01 Record entry General Journal Clear entry Debit Credit He View general Journal
Waterway Ltd. issued a $1,062,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12% effective interest. The bond paid 10% interest on January 1 and July 1 each year. The company's year-end was December 31, and Waterway followed IFRS. Using 1.factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount received for the bond, and any discount or premium on the bond. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1 (Round present value factor calculations to 5 decimal places, eg. 1.25124 and final answers to 0 decimal places eg. 58,971.) Proceeds from sale of bond on bond Date $ $ Prepare the journal entries for above transactions. (Round answers to O decimal places, e.g. 5,275. 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.…
Your company sells $41,000 of one-year, 12% bonds for an issue price of $39,500. The journal entry to record this transaction will include a credit to Bonds Payable in the amount of: Multiple Choice $39,500. $41,000. $44,420. $45,920.
The Gonzalez Group issued $890,000 of 9% bonds on June 30, 2024, for $978,079. • 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. No 1 2 3 Date June 30, 2024 Cash June 30, 2025 Answer is complete but not entirely correct. December 31, 202 Interest expense General Journal Bonds payable Premium on bonds payable Premium on bonds payable Cash Interest expense Premium on bonds payable Cash 333 333 Debit 978,079 35,520 X 1,520 X 35,520 1,520 X Credit 890,000 88,079 37,040 37,040 X
Enviro Company issues 8.50%, 10-year bonds with a par value of $260,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 5.50%, which implies a selling price of 123.625. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 X Answer is not complete. What is the amount of bond interest expense recorded on the first interest payment date? Note: Round your final answer to nearest whole dollar amount. Bond interest expense Required 2 Required 3 >
Enviro Company issues 12.50%, 10-year bonds with a par value of $470,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 9.50%, which implies a selling price of 128.875. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from issuance of these bonds? 2. What total amount of bond interest expense will be recognized over the life of these bonds? 3. What is the amount of bond interest expense recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What are the issuer's cash proceeds from issuance of these bonds? (Round your final answer to nearest whole dollar amount.) Cash proceeds
Metlock Ltd. issued a $791,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12% effective interest. The bond paid 10% interest on January 1 and July 1 each year. The company's year-end was December 31, and Metlock followed IFRS. Using 1. factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount received for the bond, and any discount or premium on the bond. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ORDINARY ANNUITY OF 1. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places e.g. 58,971.) Proceeds from sale of bond Discount on bond Prepare the journal entries for above transactions. (Round answers to 0 decimal places, e.g. 5,275. 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 0 for the…
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 Credit
Enviro Company issues 8%, 10-year bonds with a par value of $200,000 and semiannual interest payments. On the Issue date, the annual market rate for these bonds is 10%, which implies a selling price of 87 12. The straight-line method is used to allocate interest expense. 1. What are the issuer's cash proceeds from Issuance of these bonds? 2. What total amount of bond Interest expense will be recognized over the life of these bonds? 3. What is the amount of bond Interest expense recorded on the first interest payment date? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Answer is complete but not entirely correct. Required 3 What total amount of bond interest expense will be recognized over the life of these bonds? Note: Round final answers to the nearest whole dollar amount. payments of Par value at maturity Total Bond Interest Expense Over Life of Bonds: Amount repaid: 20 $ 168,000 $ 3,360,000 200,000 3,560,000 Total repayments Less amount…