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Kindly help me answer these questions. Than you!!! You learn from his notes in the new file that FixAll had issued 28,500 convertible bonds at

Kindly help me answer these questions. Than you!!!

You learn from his notes in the new file that FixAll had issued 28,500 convertible bonds at 121 on January 1, 2019. The $1,000 par value bonds carried an interest rate of 8% and had a 15-year term. Interest was to be paid by the company on June 30 and December 31. Each bond came attached with were sixteen detachable warrants.

A warrant holder was entitled to purchase with each warrant, one share from FixAll at a price of $57. Further, each bond was convertible, at the option of the holder, into 16 common shares. The underwriter informed the company that the bonds alone, excluding warrants and conversion rights, could be issued in the market at a 6.5% premium. Similar warrants were being traded at a market value of $4 each at the date of issue. You have been asked to view this situation on the assumption that the company uses ASPE for its accounts, records debt first and amortizes the bonds using straight line.

REQUIRED:

  1. Make the appropriate journal entry to record the issue of these financial instruments on January 1, 2019.
  2. Make an appropriate journal entry to record the interest expense on December 31, 2021.
  3. On July 1, 2022, 65% of the warrants outstanding were exercised by the warrant holders. The company's shares were being traded in the market at a price of $62 each on that day. Make an appropriate journal entry to record this transaction.
  4. On July 1, 2023, 60% of the bondholders submitted their bonds for conversion. The company's shares were being traded at $72 on that day. The company had duly recorded and paid off all interest accrued and due on the bonds up to June 30, 2023. Prepare the appropriate journal entry , using the book value method, to record the conversion of the bonds on July 1, 2023.
  5. How many shares would have been issued from the bond conversion of July 1, 2023?

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