Reference no: EM133100114

Questions -

a. Grouper Corporation had 111,600 shares of stock outstanding on January 1, 2020. On May 1, 2020, Grouper issued 51,600 shares. On July 1, Grouper purchased 9,840 treasury shares, which were reissued on October 1.

Compute Grouper's weighted-average number of shares outstanding for 2020.

Weighted-average number of shares outstanding

b. Bramble Company has bonds payable outstanding in the amount of $400,000, and the Premium on Bonds Payable account has a balance of $6,200. Each $1,000 bond is convertible into 20 shares of preferred stock of par value of $50 per share. All bonds are converted into preferred stock.

Assuming that the book value method was used, what entry would be made?

c. Tamarisk Inc. has decided to raise additional capital by issuing $183,000 face value of bonds with a coupon rate of 9%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $153,900, and the value of the warrants in the market is $17,100. The bonds sold in the market at issuance for $155,000.

(1) What entry should be made at the time of the issuance of the bonds and warrants?

(2) Prepare the entry if the warrants were nondetachable?