Brief Exercise 16-11

Ayayai Corporation had312,000shares of common stock outstanding on January 1, 2017. On May 1, Ayayai issued29,700shares.

Exercise 16-4

On January 1, 2016, when its $30par value common stock was selling for $80per share, Whispering Corp. issued $10,800,000of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000bond to convert the bond into five shares of the corporation's common stock. The debentures were issued for $11,664,000. The present value of the bond payments at the time of issuance was $9,180,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2017, the corporation's $30par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2018, when the corporation's $15par value common stock was selling for $135per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.

Exercise 16-10

On November 1, 2017, Teal Company adopted a stock-option plan that granted options to key executives to purchase21,300shares of the company's $11par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $319,500.

Brief Exercise 16-11 Ayayai Corporation had 312,000 shares of common stock outstanding on January 1, 2017. On May 1, Ayayai issued 29,700 shares. (a) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued for cash. $ Weighted-average number of shares outstanding (b) Compute the weighted-average number of shares outstanding if the 29,700 shares were issued in a stock dividend. $ Weighted-average number of shares outstanding Exercise 16-4 On January 1, 2016, when its $30 par value common stock was selling for $80 per share, Whispering Corp. issued $10,800,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation's common stock. The debentures were issued for $11,664,000. The present value of the bond payments at the time of issuance was $9,180,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2017, the corporation's $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2018, when the corporation's $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (a) Prepare the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (b) Prepare the entry to record the exercise of the conversion option, using the book value method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Exercise 16-10 On November 1, 2017, Teal Company adopted a stock-option plan that granted options to key executives to purchase 21,300 shares of the company's $11 par value common stock. The options were granted on January 2, 2018, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $319,500. All of the options were exercised during the year 2020: 14,200 on January 3 when the market price was $70, and 7,100 on May 1 when the market price was $80 a share. Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to 0 decimal places, e.g. 5,125.) Date Jan. 3, 2020 Account Titles and Explanation Debit Credit May 1, 2020