Problem 14-19 (Algo) Convertible bonds; induced conversion; bonds with detachable warrants [LO14-5] Bradley-Link's December 31, 2021,...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66569dd536263_53266569dd4b5e99.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66569dd5ee462_53366569dd574355.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66569dd69cd48_53466569dd6254f1.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66569dd750686_53466569dd6c9901.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66569dd7ea96d_53566569dd7797ee.jpg)
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/66569dd89ab73_53666569dd8226f2.jpg)
Transcribed Image Text:
Problem 14-19 (Algo) Convertible bonds; induced conversion; bonds with detachable warrants [LO14-5] Bradley-Link's December 31, 2021, balance sheet included the following items: Long-Term Liabilities 8.0% convertible bonds, callable at 102 beginning in 2022, due 2025 (net of unamortized discount of $3) [note 8]] 8.8% registered bonds callable at 105 beginning in 2031, due 2035 (net of unamortized discount of $1) [note 8] Shareholders' Equity Equity-stock warrants Note 8: Bonds (in part) ($ in millions) $147 64 6 The 8.0% bonds were issued in 2008 at 94.0 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond is convertible into 50 shares of the Company's no par common stock. The 8.8% bonds were issued in 2012 at 103 to yield 10% Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitles the holder to purchase one share of the Company's no par common stock for $30, beginning 2022 On January 3, 2022, when Bradley-Link's common stock had a market price of $37 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 $52 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 $140 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 55 shares for each bond rather than the 50 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 Complete this question by entering your answers in the tabs below. Problem 14-19 (Algo) Convertible bonds; induced conversion; bonds with detachable warrants [LO14-5] Bradley-Link's December 31, 2021, balance sheet included the following items: Long-Term Liabilities 8.0% convertible bonds, callable at 102 beginning in 2022, due 2025 (net of unamortized discount of $3) [note 8]] 8.8% registered bonds callable at 105 beginning in 2031, due 2035 (net of unamortized discount of $1) [note 8] Shareholders' Equity Equity-stock warrants Note 8: Bonds (in part) ($ in millions) $147 64 6 The 8.0% bonds were issued in 2008 at 94.0 to yield 10%. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond is convertible into 50 shares of the Company's no par common stock. The 8.8% bonds were issued in 2012 at 103 to yield 10% Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitles the holder to purchase one share of the Company's no par common stock for $30, beginning 2022 On January 3, 2022, when Bradley-Link's common stock had a market price of $37 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 $52 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 $140 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 55 shares for each bond rather than the 50 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 Complete this question by entering your answers in the tabs below.
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Below is an option quote on IBM from the CBOE Web site. a. Which option contract had the most trades today? b. Which option contract is being held the most overall? c. Suppose you purchase one option...
-
An investor would be thinking correctly if they decided to buy a particular type of bond because they thought that: a. Bond prices were about to fall due to a coming decrease in rates b. Bond prices...
-
Zevo is currently reaching the end of the requirements modeling phase of a new inventory control system for their global company. As a systems analyst you are asked to support this ongoing project....
-
Pre-determined overhead (POHR) for the period is $2.40 direct labor hour (DLH). Consider the following actual results for the period: (1) budgeted overhead = $120,000, (2) budgeted DLH = 50,000, (3)...
-
State whether the demand is elstic, inelastic or neither for the given demand function 700 q= p+5 at p = 15 Inelastic Elastic Neither inelastic nor elastic
-
Communication is an essential means to convey important information to the organization. Or it can provide other information such as events, benefits and many other situations. How effective can an...
-
The following data pertains to a defined benefit (DB) pension plan: defined benefit obligation, December 31, 2015 30,000 long-term interest rate on corporate bonds 8% past service cost, December 31,...
-
Q6. Prove that sin5x-2sin3x+sinx cas5x-casx = tank.
-
Adam issued $90,000 of 10-year, 5% bonds payable on January 1, 2016. Adam pays interest each January 1 and July 1 and amortizes discount or premium by the straight-line amortization method. The...
-
h) If a matrix has 12 elements, what are the possible orders it can have. i) Write equation y = 3x + 2 in intercept form. -5 12 j) If cosx = x lies in second quadrant, find value of tanx.
-
Contemporary art is an art of today, as a senior high school student do you consider yourself a contemporary artist or a traditional one? How and why?
-
Able Co. allows select customers to make purchases on credit. Its other customers can use either of two credit cards: Commerce Bank or Aztec. Commerce Bank deducts a 3% service charge for sales on...
-
On December 31, 2005, Klimek Co.s records show the following results for the year: Required Cash sales... Credit sales $1,015,000 1,241,000 In addition, its unadjusted trial balance includes the...
-
Crist Co. began operations on January 1, 2004, and completed several transactions during 2004 and 2005 that involved sales on credit, accounts receivable collections, and bad debts. These...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App