BRHC Corporation has issued bonds with a $12,000,000 face value that has a carrying value of $11,232,125 on September 1, 2019. For each of the following assumptions, describe the cash flow that will occur and the impact each scenario will have on BRHC’s budgeted balance sheet and income statement. Consider each scenario an independent event.

Required:

A. BRHC Corporation’s bonds have a call price of 102 and on September 1, 2019, the corporations will exercise the call feature on the entire bond issue.
B. BRHC Corporation’s bonds have a 50-to-1 common stock conversion feature: That is, one bond is convertible into 50 shares of BRHC common stock. Because the price of the common stock has reached $30 per share, BRHC expects that on September 1, 2019, 25 percent of the bondholders will convert their bonds into common stock