Journal entries-exercise of the warrants

Assignment Help Accounting Basics

Reference no: EM13151506

• On August 1, 2012, United Corporation issued $10 million of 8% convertible bonds at 105.

• The bonds mature in 20 years.

• Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of United $5 par common stock.

• World Company purchased 10% of the bond issue.

• On August 1, 2012, the market value per share for United stock was $56 and the market value of each warrant was $6.

• In March 2018, when United common stock had a market price of $70 per share and the unamortized premium balance was $300,000, World exercised the warrants it held.

Required:

1. Prepare the journal entries on August 1, 2012, to record (a) the issuance of the bonds by United and (b) the investment by World.

2. Prepare the journal entries for both companies in March 2018 to record the exercise of the warrants.

Reference no: EM13151506

Questions Cloud

What volume of 2.811 m oxalic acid solution is needed : What volume of 2.811 M oxalic acid solution is needed to react to the equivalence point with a 5.090 g sample of material that is 92.10% NaOH

Would you recommend they buy another copier or hire another : Copiers cost about twice as much as workers. Would you recommend they buy another copier or hire another worker?

Estimating the average loss of production per acre : What would be your recommendation to the local Farm Bureau for estimating the average loss of production per acre, given the data you have at hand?

Explain what the value of cpi means : The CPI for 2009 was 195 but i know that the imfataion rate couldn't habe been as high as95% in 2005". In your answer carefully explain what the value of CPI means.

Journal entries-exercise of the warrants : Prepare the journal entries for both companies in March 2018 to record the exercise of the warrants.

Imagine that you work for the maker : Imagine that you work for the maker of a leading brand of low calorie, frozen microwavable food that estimates the following demand equation for its product using date from 26 supermarkets around the country for the month of April.

How much have prices risen between 2000 and 2010 : How much have prices risen between 2000 and 2010? Compare the answers given by the Laspeyres and Passche price indexes.

What volume of ethylene glycol a nonelectrolyte, must added : What volume of ethylene glycol (C2H6O2), a nonelectrolyte, must be added to 12.7 L of water to produce an antifreeze solution with a freezing point of -34.6°C? (The density of ethylene glycol is 1.11 g/cm3, and the density of water is 1.00 g/cm3.)

What is the probability that entire batch wili be rejected : The entire batch will be rejected if at least one of those tested is defective. What is the probability that the entire batch wili be rejected?

User Account

All Pages