Question
please assist Bradley-Links December 31, 2021, balance sheet included the following items: Long-Term Liabilities ($ in millions) 9.0% convertible bonds, callable at 103 beginning in
please assist
Bradley-Links December 31, 2021, balance sheet included the following items:
Long-Term Liabilities | ($ in millions) |
9.0% convertible bonds, callable at 103 beginning in 2022, due 2025 (net of unamortized discount of $5) [note 8] | $195 |
9.8% registered bonds callable at 106 beginning in 2031, due 2035 (net of unamortized discount of $2) [note 8] | 55 |
Shareholders Equity | 6 |
Equitystock warrants |
Note 8: Bonds (in part) The 9.0% bonds were issued in 2008 at 96.0 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond is convertible into 30 shares of the Companys no par common stock. The 9.8% bonds were issued in 2012 at 104 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitles the holder to purchase one share of the Companys no par common stock for $25, beginning 2022. On January 3, 2022, when Bradley-Links common stock had a market price of $32 per share, Bradley-Link called the convertible bonds to force conversion. 90% were converted; the remainder were acquired at the call price. When the common stock price reached an all-time high of $37 in December of 2022, 40% of the warrants were exercised. Required: 1. Prepare the journal entries that were recorded when each of the two bond issues was originally sold in 2008 and 2012. 2. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2022 and the retirement of the remainder. 3. Assume Bradley-Link induced conversion by offering $160 cash for each bond converted. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2022. 4. Assume Bradley-Link induced conversion by modifying the conversion ratio to exchange 35 shares for each bond rather than the 30 shares provided in the contract. Prepare the journal entry to record (book value method) the conversion of 90% of the convertible bonds in January 2022. 5. Prepare the journal entry to record the exercise of the warrants in December 2022.
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