1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Agata [3.3K]
3 years ago
14

Flint Inc. issued $3,790,000 of 10%, 10-year convertible bonds on June 1, 2020, at 99 plus accrued interest. The bonds were date

d April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,421,250 of these bonds were converted into 34,000 shares of $18 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued. (b) Prepare the entry to record the conversion on April 1, 2021. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made.
Business
1 answer:
gulaghasi [49]3 years ago
8 0

Answer:

A. Dr Interest Payable $63,167

Dr Interest expense $127,617

Cr Discount on Bonds payable $1,284

Cr Cash $189,500

B. Dr Bonds payable $1,421,250

Cr Discount on Bonds payable $13,008

Cr Common Stock $612,000

Cr Paid-in capital in excess of par- Common Stock $796,242

Explanation:

(a) Preparation of the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued.

Dr Interest Payable $63,167

[($3,790,000*.10)/2*(2/6)]

Dr Interest expense $127,617

[($3,790,000*.10)/2*(4/6) + $1,284]

Cr Discount on Bonds payable $1,284

($321*4)

Cr Cash $189,500

[ ( $3,790,000*.10)/2]

(To record interest expense at October 1, 2020.)

Calculation for the discount per month

First step is to calculate the remaining months

Months remaining= (10 years *12-2)

Months remaining=118 months

Second step is to calculate the Total discount

Total Discount= $3,790,000-($3,790,000*.99)

Total discount=$3,790,000-$3,752,100

Total discount=$37,900

Now let calculate the discount per month

Discount per month=($37,900/118)

Discount per month=$321

(b) Preparation of the entry to record the conversion on April 1, 2021

Dr Bonds payable $1,421,250

Cr Discount on Bonds payable $13,008

Cr Common Stock $612,000

(34,000*$18)

Cr Paid-in capital in excess of par- Common Stock $796,242

[$1,421,250-($13,008+$612,000)]

(To record conversion of bond into 34,000 shares.)

Calculation for Unamortized bond discount

Discount of the bonds $14,213

($37,900*(3/8))

Less Discount amortized ($1,205)

[($37,900/118)*10 years*(3/8)]

Unamortized bond discount $13,008

($14,213-$1,205)

You might be interested in
In some cases, individuals who start a business have special voting rights that help them exercise more control over the firm. T
Olin [163]

individuals that have special voting rights owns a special class of stock called classified stock.

The classified stock refers to class of common stock that comes with special privileges like dividend rights or enhanced voting rights.

Usually, these stock are issued/owned by individual that started or co-start the business.

The classified stock is used to ensure the company's founders maintain its control over the establish company even without owning the majority of the common stock.

Therefore, the individuals that have special voting rights owns a special class of stock called the classified stock.

Read more about classified stock:

<em>brainly.com/question/23881482</em>

6 0
3 years ago
8. If the unemployment rate is below its natural rate, then ________. Group of answer choices output is above its potential leve
fgiga [73]

Answer:

Output is below its potential level.

4 0
3 years ago
Orem Corporation's current liabilities are $116,160, its long-term liabilities are $474,240, and its working capital is $162,600
jekas [21]

Answer:

Total long-term assets must equal: d $2,771,640

Explanation:

Orem Corporation's Total Debt (liabilities) = current liabilities + long-term liabilities = $116,160 + $474,240 = $590,400

Debt-to-equity ratio = Total Debt/Total Equity

Total Equity = Total Debt/Debt-to-equity ratio = $590,400/0.24 = $2,460,000

Working capital = Current assets - Current abilities

Current assets = Working capital + Current abilities = $162,600 + $116,160 = $278,760

Basing accounting equation:

Total assets = Current assets + Long-term assets = Total liabilities + Total Equity = $590,400 + $2,460,000 = $3,050,400

Long-term assets = Total assets - Current assets = $3,050,400 - $278,760 = $2,771,640

7 0
3 years ago
In the russian domain, where does the commercial agricultural products concentrate
notsponge [240]
<span>Belarus and central European Russia had very long growing season, but they had acidic podzol soils that  limit farm output</span><span>.  Three environments influence agriculture in this region</span><span>, Poor soils, cold temps, forests north of Moscow and St. Petersburg.  </span>Soils support commercial wheat, corn, sugar, beets, meat production.
5 0
3 years ago
Indicate how much money will be paid to the creditor associated with each debt.
riadik2000 [5.3K]
There is not enough information to have a significant answer
3 0
3 years ago
Other questions:
  • You determine that a robot welder is malfunctioning on your assembly line because final inspection has revealed a loose connecti
    13·1 answer
  • The following are nine technical accounting terms introduced or emphasized in this chapter. Responsibility margin Transfer price
    10·1 answer
  • A firm is considering changing their credit terms. It is estimated that this change would result in sales increasing by $ 1 comm
    6·2 answers
  • The "least restrictive environment" provision of P.L. 94-142 provides a direct legal basis for 23) ______
    11·1 answer
  • This year Randy paid $28,000 of interest. (Randy borrowed $450,000 to buy his residence, which is currently worth $500,000.) Ran
    8·1 answer
  • Ventaz corp manufactures small windows for back yard sheds.​ historically, its demand has ranged from 30 to 50 windows per day w
    14·1 answer
  • 1. On January 1, 2018, Golden Company purchased a delivery truck for $64,000. The van was estimated to have a 5-year useful life
    13·2 answers
  • The Cornelius Company has an ROE of 14.4 percent and a payout ratio of 30 percent. What is the company’s sustainable growth rate
    15·1 answer
  • A company purchased factory equipment on June 1, 2021, for $173000. It is estimated that the equipment will have a $8600 salvage
    9·1 answer
  • A firm based in mexico has found its growth is restricted by the limited liquidity of the mexican capital market. what are the f
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!