Problem 7-6 (IAA) Karen Company showed the following accounts on December 31, 2020. Bonds payable Premium...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Problem 7-6 (IAA) Karen Company showed the following accounts on December 31, 2020. Bonds payable Premium on bonds payable Share capital-250,000 shares authorized and 200,000 shares issued, P50 par Share premium - issuance Share premium-conversion privilege Retained earnings 5,000,000 250,000 10,000,000 2,000,000 500,000 2,500,000 The bonds are convertible into 10 shares of capital for every P1,000 bond. On December 31, 2020, the entire bond issue was converted and on this date, the market value of the share is 120 and the market value of the bonds is 103. The entity paid P200,000 as a result of the bond conversion. Required: Prepare journal entries for the conversion of the bonds on December 31, 2020. Problem 7-7 (IAA) convertible bonds with P1,000 face amount per bond. The On January 1, 2020, Andrea Company issued 4,000 three-year life and are issued at 105 or a total bonds have a proceeds of P4,200,000. Interest is payable annually at 6% every December 31. Each bond is convertible into 20 ordinary shares with P50 par value. When the bonds are issued, the market rate of interest for similar bonds without conversion option is 8%. The PV of 1 at 8% for three periods is .79, and the PV of an ordinary annuity of 1 at 8% for three periods is 2.58. Required: 1. Prepare journal entry to record the original issuance of the convertible bonds. 2. Prepare journal entry to record the full payment of the convertible bonds at maturity on January 1, 2023. Problem 7-6 (IAA) Karen Company showed the following accounts on December 31, 2020. Bonds payable Premium on bonds payable Share capital-250,000 shares authorized and 200,000 shares issued, P50 par Share premium - issuance Share premium-conversion privilege Retained earnings 5,000,000 250,000 10,000,000 2,000,000 500,000 2,500,000 The bonds are convertible into 10 shares of capital for every P1,000 bond. On December 31, 2020, the entire bond issue was converted and on this date, the market value of the share is 120 and the market value of the bonds is 103. The entity paid P200,000 as a result of the bond conversion. Required: Prepare journal entries for the conversion of the bonds on December 31, 2020. Problem 7-7 (IAA) convertible bonds with P1,000 face amount per bond. The On January 1, 2020, Andrea Company issued 4,000 three-year life and are issued at 105 or a total bonds have a proceeds of P4,200,000. Interest is payable annually at 6% every December 31. Each bond is convertible into 20 ordinary shares with P50 par value. When the bonds are issued, the market rate of interest for similar bonds without conversion option is 8%. The PV of 1 at 8% for three periods is .79, and the PV of an ordinary annuity of 1 at 8% for three periods is 2.58. Required: 1. Prepare journal entry to record the original issuance of the convertible bonds. 2. Prepare journal entry to record the full payment of the convertible bonds at maturity on January 1, 2023.
Expert Answer:
Answer rating: 100% (QA)
The solution to problem 76 Karen Company Date Particulars Debit Amount Credit Amount 31122020 Bond P... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
Students also viewed these accounting questions
-
The Mighty Power Tool Company has the following accounts on its books: The firm extends credit on terms of 1/15, net 30. Develop an aging schedule using 15-day increments through 60 days, and then...
-
On January 1, 2010 the Knox Company showed the following alphabetical list of stockholders equity balances: Additional paid-in capital on common stock ........ $130,000 Additional paid-in capital on...
-
A company reports the following accounts on its classified balance sheet: Additional paid in capital ...... Accounts receivable Land .............. Bonds payable, due in 10 years Treasury stock...
-
Which of the following variable types can be used in a switch statement under some circumstances? (Choose three.) A. An enumerated type B. StringBuilder C. Byte D. Double E. var F. Exception.
-
Security Pension Services helps clients to set up and administer pension plans that are in compliance with tax laws and regulatory requirements. The firm uses a job-order costing system in which...
-
Gap, Inc., is trying to incorporate human resource and supplier considerations into its management decision making. Here is Gaps report of findings from a recent Social Responsibility Report: Because...
-
An incompressible liquid flows steadily along the pipe shown in Fig. P5.98. Determine the direction of flow and the head loss over the 6-m length of pipe. Figure P5.98 0.75 m 1.0 m 6 m 1.5 m 3 m
-
For the equation (a) Find the transfer function and put it in standard gain/time constant form. (b) Discuss the qualitative form of the response of this system (independent of the input forcing) over...
-
An investor contributes $726.00 per quarter in an account that pays 4.20% APR with quarterly compounding. The first contribution will be made next quarter. What is the future value of this account?
-
An alphabetical list of the adjusted trial balance accounts for North Country Rentals after its first year of operations ending March 31, 2020, is shown below: Required 1. Calculate the capital...
-
I deposit money into an ordinary annuity that earns 4.8% interest, compounded monthly. How much money do I need to deposit into the annuity every month to have a final value of 73,000 in 16 years?
-
Explain the difference between a product and a brand.
-
Discuss the role and limitations of the external analysis phase of marketing planning.
-
Kaisers installs a new milkshake machine that increases labor productivity. If the price of a milkshake remains at $4, does Kaisers change the number of workers it hires? Explain. Kaisers Ice Cream...
-
What happens when people who might ordinarily come into contact with one another on their jobs no longer have that social contact? Several things may happen. For example, when employees do not see...
-
The Framers of the U.S. Constitution clearly wanted to limit the legislative power of the national government. They made this desire quite clear by enumerating the powers that Congress would possess...
-
Hello Ltd. is a steel producer and has banked with Monash bank for five years. Hello Ltd. now applies for a 3-year loan from Monash bank. As a lending officer at Monash bank, you are provided with...
-
1. Following are information about Alhadaf Co. Cost incurred Inventory Purchases Sales Adverting expense Salary Expense Depreciation Beginning Inventory Ending Inventory Amount 118,000 350.000 90,000...
-
Online Enterprises owns 95 percent of Downlink Corporation. On January 1, 20X1, Downlink issued $200,000 of five-year bonds at 115. Annual interest of 12 percent is paid semiannually on January 1 and...
-
Select the correct answer for each of the following questions. 1. On May 1, 20X1, Cathy and Mort formed a partnership and agreed to share profits and losses in the ratio of 3:7, respectively. Cathy...
-
How will the elimination of unrealized intercompany inventory profits recorded on the subsidiarys books affect consolidated retained earnings?
-
Fluid is a substance that: (a) Cannot be subjected to shear force (b) Always expands until it fills any container (c) Has the same shear stress at a point regardless of its motion (d) Cannot remain...
-
Sketch and explain split air conditioner?
-
Define air conditioning. State the basic component of air conditioning systems.
Study smarter with the SolutionInn App