Why Couldn't This Be Easy, Inc. has two issues of securities outstanding: common stock and $3,400,000...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Why Couldn't This Be Easy, Inc. has two issues of securities outstanding: common stock and $3,400,000 face value, 5-year, 2%, convertible bonds. The bonds were issued January 1st, 2022, for $3,094,592 when the market rate was 4%. Bond interest payment dates are June 30th and December 31st. Each bond is convertible into 45 shares of $20 par value common stock. On July 1, 2022, the holders of $510,000 face value bonds exercised the conversion privilege. On that date, the bonds were selling at 108 and the market price of the stock was $38. The company uses the effective interest method for the amortization of bond discounts and/or premiums and the book value method to account for the conversion. Required: Determine the amount to be credited to "Paid-in-Capital for Common Stock" on July 1st, 2022. If an amortization table is needed (hint- through June 30, 2022 - hint), please submit that work as well. Round all work to the nearest dollar. Why Couldn't This Be Easy, Inc. has two issues of securities outstanding: common stock and $3,400,000 face value, 5-year, 2%, convertible bonds. The bonds were issued January 1st, 2022, for $3,094,592 when the market rate was 4%. Bond interest payment dates are June 30th and December 31st. Each bond is convertible into 45 shares of $20 par value common stock. On July 1, 2022, the holders of $510,000 face value bonds exercised the conversion privilege. On that date, the bonds were selling at 108 and the market price of the stock was $38. The company uses the effective interest method for the amortization of bond discounts and/or premiums and the book value method to account for the conversion. Required: Determine the amount to be credited to "Paid-in-Capital for Common Stock" on July 1st, 2022. If an amortization table is needed (hint- through June 30, 2022 - hint), please submit that work as well. Round all work to the nearest dollar.
Expert Answer:
Answer rating: 100% (QA)
my answer is clearly defined below first we should compute issue price of bonds ie the present ... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Posted Date:
Students also viewed these accounting questions
-
Shankman Corporation had two issues of securities outstanding: common shares and an 8% convertible bond issue in the face amount of $8 million. Interest payment dates of the bond issue are June 30...
-
Shankman Corporation had two issues of securities outstanding: common shares and an 8% convertible bond issue in the face amount of $8 million. Interest payment dates of the bond issue are June 30...
-
Somerton Corporation had two issues of securities outstanding: common shares and a 6% convertible bond issue in the face amount of $6 million. Interest payment dates of the bond issue are June 30 and...
-
Select only 2. Two questions which can be used to address ethical issues impacting organizations and Human Resource Management include: What would my Supervisor say? Does this behavior or result meet...
-
Explain how phosphorylation is involved in the function of the sodiumpotassium ATPase.
-
Bi (atomic number 83) is used in some stomach discomfort relievers. Using its place on the periodic table, predict its valence shell electron configuration.
-
Suppose that the probabilities are \(0.2466,0.3452\), \(0.2417,0.1128,0.0395,0.0111,0.0026\), and 0.0005 that there will be \(0,1,2,3,4,5,6\), or 7 polluting spills in the Great Lakes on any one day....
-
Lucia, a single taxpayer, operates a florist business. She is considering either continuing the business as a sole proprietorship or reorganizing it as either a C corporation or an S corporation. Her...
-
Sheridan Corp. had total variable costs of $224.200 total hied costs of $143500, and total revenues of $380.000. Compute the required sales in dollars to break even
-
The irreversible, first-order reaction of gaseous A B occurs in spherical catalyst pellets with a radius of 2 mm. For this problem, the molecular diffusivity of A is 1.2 X 10 1 cm 2 /s and the...
-
1. Name a few reasons for the implementation of Electronic log books and there hours of service. 2. Explain two types of I.C.E (internal combustion engine emissions and what technology is being used...
-
A cube of mass m, glides through from rest along a frictionless quarter ramp from height 6 m and then crashes with stationary cube of mass m (m-0.5m). After the impact (elastic collision), the second...
-
3. An object m is tied to one end of a string, moves in a circle with a constant speed on a horizontal frictionless table. The second end of the string is connected to a big mass M and goes through a...
-
(b) State Carnot's theorem. Draw the PV diagram showing the Carnot's cycle for an ideal gas and arrive at IQH/Qcl = TH/Tc (3 M)
-
a) Construct a graph of Weight versus Spring Displacement with Spring Displacement on the x-axis. Draw the line that best fits your data points. The slope of the graph is the spring constant for the...
-
Consider a classical gas consisting of N impenetrable hard sphere particles of radius R. If the gas is placed in a relatively large container of volume V, a. (5%) determine the dependence of (N,V, E)...
-
6. Given a 1.2 MeV electron (an electron with 1.2 MeV kinetic energy) a. Is this electron relativistic? [5 pts] b. Calculate the electron's velocity. [10 pts] Calculate the electron's momentum. [10...
-
What are current assets and current liabilities? How are they different from non-current assets and non-current liabilities?
-
True or false? a. Sensitivity analysis can be used to identify the variables most crucial to a project's success. b. Sensitivity analysis is used to obtain expected, optimistic, and pessimistic...
-
MM's proposition 1 suggests that in the absence of taxes it makes no difference whether the firm borrows on behalf of its shareholders or whether they borrow directly. However, if there are corporate...
-
A General Power bond carries a coupon rate of 8%, has 9 years until maturity, and sells at a yield to maturity of 7%. (Assume annual interest payments.) a. What interest payments to bondholders...
-
Using what you learned in this chapter of Dessler Human Resource Management, build on the companys new system by recommending two more specific career development activities the hotel should...
-
Many hotel jobs are inherently dead end; for example, maids, laundry workers, and valets, either have no great aspirations to move up, or are just using these jobs temporarily, for instance, to help...
-
Should other employees (cleaner/spotters, counter people) be put on a similar plan? Why or why not? If so, how exactly?
Study smarter with the SolutionInn App