I just want to fact check this batch of questions and make sure that I'm doing things correctly. Thank you!
21. On January 1, YRI1 Sonic Inc. began business operations. The company's yearend is December 31. Required: Prepare formal journal entries that would be recorded on the dates listed below. The company uses reversing journal entries. For convenience, round all final answers to the nearest dollar (do not round intermediate calculations). Date Event January 1, YRII Sold 2,000 shares of common stock for $10 per share. The stock has a par value of $1 per share. January 6, YRII Received and paid a bill from Stewart & Gordon Inc. for underwriting services rendered in helping the company issue the common stock. The amount of the bill was $50. March 1, YRII Sold 100 shares of Class A preferred stock for $112 per share. Class A preferred is cumulative, non- participating, has a par value of $100 per share, and has an annual dividend rate of 3%. Each share of preferred stock can be converted into 5 shares of common stock beginning February 1, YR12. The stock indenture agreement indicates that the annual dividend will be prorated in the year of issuance and the year of conversion based on the time the preferred stock is actually outstanding. August 1, YRII Sold $3,000 of convertible bonds at 102. Each bond has a face value of $1,000 and a coupon rate of 4%. These bonds are dated July 1, YR11 and mature June 30, YR16 (term = 5 years). Each bond is convertible into 25 shares of common stock on an interest payment date. Interest on these bonds is paid each July 1 and January 1. Company policy is to accrue interest and record amortization (if any) once each year on December 31. August 15, YRII Received and paid a bill from Stewart & Gordon Inc. for underwriting services related to issuance of the convertible bonds. The amount of the bill was $100. September 5, YRII Sold in a lump sum sale a package of 50 common shares and 500 warrants for a total price of $800. Each warrant entitles the holder to purchase one share of common stock for $15 during the period October YR11 to December 2021. At the date of the sale the common stock had a market value of $12 per share and the market value of the warrants was unknown. December 1, YRII The Board of Directors declared the dividend on preferred stock. The date of record was set as December 24, YR11 and the date of payment was set as January 15, YR12. December 24, YRII Date of record for the preferred dividend declared on December 1, YRII. December 31, YRII Made all necessary adjusting entries. January 1, YR12 January 1, YR12 January 1, YRI2 January 15, YR12 February 1, YRI2 March 15, YRI2 Recorded reversing journal entries. Paid interest on the convertible bonds. On this date owners of $1,000 of the convertible bonds converted their bonds to common stock. On this date market prices were: common stock=$14; bonds (each)=$1,050. Paid the dividend on preferred stock. The board of directors declared a 40% stock dividend on common stock. At this date the common stock is selling for $15 each. The date of record is February 15, YR12 and the date of distribution is April 1, YR12. Warrant holders exercised 100 warrants when the market price of the common stock was $18. On this date the company issued the appropriate number of common shares. Shareholders of preferred stock converted 20 shares of the stock to common shares. At the date of conversion the market price of the preferred was $115 and the market price of the common was $16. Terms of the preferred stock indenture agreement require that, at the date of conversion, holders be paid any dividends in arrears and a prorata portion of the current year preferred dividends (basis of proration is the portion of the year that the preferred stock was outstanding). Accordingly, at this date the company paid the dividends owed. April 1, YRI2 21. On January 1, YRI1 Sonic Inc. began business operations. The company's yearend is December 31. Required: Prepare formal journal entries that would be recorded on the dates listed below. The company uses reversing journal entries. For convenience, round all final answers to the nearest dollar (do not round intermediate calculations). Date Event January 1, YRII Sold 2,000 shares of common stock for $10 per share. The stock has a par value of $1 per share. January 6, YRII Received and paid a bill from Stewart & Gordon Inc. for underwriting services rendered in helping the company issue the common stock. The amount of the bill was $50. March 1, YRII Sold 100 shares of Class A preferred stock for $112 per share. Class A preferred is cumulative, non- participating, has a par value of $100 per share, and has an annual dividend rate of 3%. Each share of preferred stock can be converted into 5 shares of common stock beginning February 1, YR12. The stock indenture agreement indicates that the annual dividend will be prorated in the year of issuance and the year of conversion based on the time the preferred stock is actually outstanding. August 1, YRII Sold $3,000 of convertible bonds at 102. Each bond has a face value of $1,000 and a coupon rate of 4%. These bonds are dated July 1, YR11 and mature June 30, YR16 (term = 5 years). Each bond is convertible into 25 shares of common stock on an interest payment date. Interest on these bonds is paid each July 1 and January 1. Company policy is to accrue interest and record amortization (if any) once each year on December 31. August 15, YRII Received and paid a bill from Stewart & Gordon Inc. for underwriting services related to issuance of the convertible bonds. The amount of the bill was $100. September 5, YRII Sold in a lump sum sale a package of 50 common shares and 500 warrants for a total price of $800. Each warrant entitles the holder to purchase one share of common stock for $15 during the period October YR11 to December 2021. At the date of the sale the common stock had a market value of $12 per share and the market value of the warrants was unknown. December 1, YRII The Board of Directors declared the dividend on preferred stock. The date of record was set as December 24, YR11 and the date of payment was set as January 15, YR12. December 24, YRII Date of record for the preferred dividend declared on December 1, YRII. December 31, YRII Made all necessary adjusting entries. January 1, YR12 January 1, YR12 January 1, YRI2 January 15, YR12 February 1, YRI2 March 15, YRI2 Recorded reversing journal entries. Paid interest on the convertible bonds. On this date owners of $1,000 of the convertible bonds converted their bonds to common stock. On this date market prices were: common stock=$14; bonds (each)=$1,050. Paid the dividend on preferred stock. The board of directors declared a 40% stock dividend on common stock. At this date the common stock is selling for $15 each. The date of record is February 15, YR12 and the date of distribution is April 1, YR12. Warrant holders exercised 100 warrants when the market price of the common stock was $18. On this date the company issued the appropriate number of common shares. Shareholders of preferred stock converted 20 shares of the stock to common shares. At the date of conversion the market price of the preferred was $115 and the market price of the common was $16. Terms of the preferred stock indenture agreement require that, at the date of conversion, holders be paid any dividends in arrears and a prorata portion of the current year preferred dividends (basis of proration is the portion of the year that the preferred stock was outstanding). Accordingly, at this date the company paid the dividends owed. April 1, YRI2
