Problem #$7$: Allocation of Proceeds between Bond and Warrants

On December $1,2020,$ Grey Company issued at $105,$ eight hundred fifty of its $9\%,$$$1,000$ bonds with the

following detachable stock warrant attached to each bond. Each warrant entitles the holder to purchase

$10$ shares of Grey's common stock.

On December $1,2020,$ the market value of the bonds, without the stock warrants, was $93,$ and the market

value of each stock purchase warrant was $$55.$ Calculate the amount of the proceeds from the issuance

that should be accounted for as the initial carrying value of the bonds and the warrants.

Problem #$8$

On January $1,2012,$ Alberton Company issues $2,000$ shares of restricted stock to its CEO. Albertson's

stock has a fair value of $$20$ per share on January $1,2019.$ Additional information is as follows.

The service period related to the restricted stock is five years.

Vesting occurs if Smith stays with the company for a five$-$year period.

The par value of the stock is $$1$ per share

Record the journal entry for unearned compensation on the Grant Date $($January $1,2019)$ and the

journal entry to record compensation expense at year end $2019($Note: two journals required$)$

Problem #$9$: Record the journal entry to record Paid$-$in$-$Capital if Smith leaves the company on January

$2,2019($two years after grant date $-$ date of forfeiture$)?$

Problem #$10$: Basic and Diluted EPS Calculations $($involving only a single debt security$)$:

In $2018$ the Gremlin Enterprises issued, at par, $150,$ $$1,000,10\%$ bonds, each convertible into $100$ shares

of common stock. Gremlin had revenues of $$40,000$ and expenses other than interest and taxes of

$$18,000$ for $2019.($Assume that the tax rate is $40\%.)$ Throughout $2019,4,000$ shares of common stock

were outstanding; none of the bonds were converted or redeemed. Gremlin's Net Income is calculated

as follows:

a$)$ Calculate the basic earnings per share for $2019$ :

b$)$ Calculate the diluted earnings per share for $2019$ :