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: Note 8: Bonds (in part) The 10.0% bonds were issued in 2008 at 97.0 to yleld 10%. Interest is paid semiannually on June 30 and December 31 Each $1,000 bond is convertible into 30 shares of the company's no par common stock. The 10.8% bonds were issued in 2012 at 106 to yield 10% Interest is paid semiannually on June 30 and December 31 Each $1,000 bond was issued with 30 detachable stock watrants, each of which entitles the holder to purchase one share of the Company's no par common stock for $25, beginning 2022 On January 3, 2022. When Bradiey-Link's common stock had a market price of $32 per shate, Bradley-Link called the convertible bonds to force conversion. 90% were converted; the remainder were acquited ot 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 $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 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 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5)). Journal entry worksheet 'Record the conversion of 90% of the convertible bonds. Note: Enter debits before credits: Prepare the journal entry to record the exercise of the warrants in December 2022. (If no entry is required for a transaction/event, select "No journal entry required" in the first account fleld. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5)) Journal entry worksheet 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. (If no entry is required for a transaction/event: select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (li.e., 5,500,000 should be entered as 5.5)). 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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5)). Prepare the journal entries that were recorded when each of the two bond issues was originally sold in 2008 and 2012. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answer in millions (li.e., 10,000,000 should be entered as 10 ), rounded to nearest whole number)
