Richmond Co. sold convertible bonds at a premium. Interest is paid on May 31 and November 30. On May 31, after interest was paid, 100, $1,000 bonds are tendered for conversion into 3,000 shares of $10 par value ordinary shares that had a market price of $40 per share. How should Richmond Co. account for the conversion of the bonds into ordinary shares under the book value method? Discuss the rationale for this method.
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Richmond Co. sold convertible bonds at a premium. Interest is paid on May 31 and November 30. On May 31, after interest was paid, 100, $1,000 bonds are tendered for conversion into 3,000 shares of $10 par value ordinary shares that had a market price of $40 per share. How should Richmond Co. account for the conversion of the bonds into ordinary shares under the book value method? Discuss the rationale for this method.
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- (Conversion of Bonds) Vargo Company has bonds payable outstanding in the amount of $500,000, and the Premium on Bonds Payable account has a balance of $7,500. Each $1,000 bond is convertible into 20 shares of preferred stock of par value of $50 per share. All bonds are converted into preferred stock.InstructionsAssuming that the book value method was used, what entry would be made?For each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Vaughn Corp. issued $21,600,000 par value 11% convertible bonds at 97. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Bramble Company issued $21,600,000 par value 11% bonds at 96. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 1. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 12%, $10,900,000 par value bonds were converted into 1,090,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $55,000 of unamortized discount applicable to the bonds, and the company paid an additional $78,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…For each of the unrelated transactions described below, present the entries required to record each transaction. P 1. 2. 3. Waterway Corp. issued $18,700,000 par value 9% convertible bonds at 99. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Wildhorse Company issued $18,700,000 par value 9% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 10%, $9,400,000 par value bonds were converted into 940,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $54,000 of unamortized discount applicable to the bonds, and the company paid an additional $71,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…
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- For each of the unrelated transactions described below, present the entries required to record each transaction. 1. Blossom Corp, issued $18,900,000 par value 9% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. 2. Blue Company issued $18,900,000 par value 9% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 3. Suppose Sepracor, Inc. called its convertible debt in 2020. Assume the following related to the transaction. The 10%, $10,800,000 par value bonds were converted into 1,080,000 shares of $ 1 par value common stock on July 1, 2020. On July 1, there was $60,000 of unamortized discount applicable to the bonds, and the company paid an additional $69,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.For each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Concord Corp. issued $20,100,000 par value 10% convertible bonds at 98. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Marigold Company issued $20,100,000 par value 10% bonds at 97. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 11%, $9,100,000 par value bonds were converted into 910,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $60,000 of unamortized discount applicable to the bonds, and the company paid an additional $81,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…For each of the unrelated transactions described below, present the entries required to record each transaction. 1. 2. 3. Waterway Corp. issued $18,700,000 par value 9% convertible bonds at 99. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at 95. Wildhorse Company issued $18,700,000 par value 9% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. Suppose Sepracor, Inc. called its convertible debt in 2025. Assume the following related to the transaction. The 10%, $9,400,000 par value bonds were converted into 940,000 shares of $1 par value common stock on July 1, 2025. On July 1, there was $54,000 of unamortized discount applicable to the bonds, and the company paid an additional $71,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. (List all debit…
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