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Prepare the necessary journal entries in 2013 when the stock-option plan was adopted, in 2014 when options were granted

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Name: Date;Instructor: Course;Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield;E16-1 (Issuance and Conversion of Bonds);Instructions;For each of the unrelated transactions described below, present the entry(ies) required to record each transaction.;1. Grand Corp. issued $20,000,000 par value 10% convertible bonds at;99 If the bonds had not been convertible, the company's investment banker estimates;they would have been sold at 95 Expenses of issuing the bonds were $70,000;Account Title Amount;Account Title Amount;Account Title Amount;Account Title Amount;Account Title Amount;2. Hoosier Company issued $20,000,000 par value 10% bonds at 98;One detachable stock warrant was issued with each $100 par value bond. At the time;of issuance, the warrants were selling for $4;Account Title Amount;Account Title Amount;Account Title Amount;Account Title Amount;Text title Formula;Text title Formula;Text title Formula;3. Suppose Sepracor, Inc. called its convertible debt in 2014. Assume the following related to the transaction;The 11% $10,000,000 par value bonds were converted into 1,000,000;shares of $1 par value common stock on July 1, 2014. On July 1, there was;$55,000 of unamortized discount applicable to the bonds, and the company paid an additional;$75,000 to the bondholders to induce conversion of all the bonds. The company records the;conversion using the book value method.;Account Title 75000 Amount;Account Title 10000000 Amount;Account Title Amount;Account Title Amount;Account Title Formula;Account Title Amount;* Calculation as desired.;E16-15 (Weighted-Average Number of Shares) Newton Inc. uses a calendar year for financial;reporting. The company is authorized to issue 9,000,000 shares of $10;par common stock. At no time has Newton issued any potentially dilutive securities. Listed below is a summary of Newton?s common stock activities.;1. Number of common shares issued and outstanding at December 31, 2012 2,000,000;2. Shares issued as a result of a 10% stock dividend on September 30, 2013 200,000;3. Shares issued for cash on March 31, 2014 2,000,000;Number of common shares issued and outstanding at December 31, 2014 4,200,000;4. A 2-for-1 stock split of Gogean?s common stock took place on March 31, 2015;Instructions;(a) Compute the weighted average number of common shares used in computing earnings per;common share for 2013 on the 2014 comparative income statement.;Text title Formula;Text title Percentage;Text title Formula;Text title Formula;Shares outstanding Formula;(b) Compute the weighted average number of common shares used in computing earnings per;common share for 2014 on the 2014 comparative income statement.;Text title Formula;Text title Formula;Shares outstanding Formula;(c) Compute the weighted average number of common shares to be used in computing earnings per;common share for 2014 on the 2015 comparative income statement.;Text title Formula;Text title Number;Shares outstanding Formula;(d) Compute the weighted average number of common shares to be used in computing earnings per;common share for 2015 on the 2015 comparative income statement.;Text title Number;Text title Number;Text title Formula;Text title Formula;Shares outstanding Formula;P16-2 (Entries for Conversion, Amortization, and Interest of Bonds) Volker Inc. issued;$2,500,000 of convertible 10 -year bonds on July 1, 2014. The bonds;provide for 12% interest payable semiannually on January 1 and July 1. The discount;in connection with the issue was $54,000, which is being amortized monthly on a;straight-line basis.;The bonds are convertible after one year into 8 shares of Volker Inc.'s $100;par value common stock for each $1,000 of bonds.;On August 1, 2015, $250,000 of bonds were turned in for conversion into common stock.;Interest has been accrued monthly and paid as due. At the time of conversion any accrued interest on bonds being converted is paid in cash.;Note: Due to rounding and significant digits, there may be slight number differences.;Instructions;Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates: (Round to the nearest dollar.);(a) August 1, 2015. (Assume the book value method is used.);Aug 1, 15 Account Title Amount;Account Title Amount;Account Title Amount;Account Title Amount;Enter entry memorandum.;Area for calculations as desired.;Area for calculations as desired.;Aug 1, 15 Account Title Amount;Account Title Amount;Enter entry memorandum.;(b) August 31, 2015.;Aug 31, 15 Account title Formula;Account title Amount;Enter entry memorandum.;Area for calculations as desired.;Aug 31, 15 Account Title 22,500;Account Title Amount;Enter entry memorandum.;(c) December 31, 2015, including closing entries for end-of-year.;Dec 31, 15 Account Title Amount;Account Title Amount;Enter entry memorandum.;Schedule 1 - Monthly Amortization Schedule;Unamortized discount on bonds payable;Amount to be amortized over 120 months Amount;Text title Formula;Text title Formula;Text title Formula;Text title Formula;Text title Formula;Text title Formula;Schedule 2 Interest Expense Schedule;Amortization of bond discount charged to bond interest expense in 2015 would be as follows;Text title Formula;Text title Formula;Total Formula;Interest on Bonds;Text title Formula;Text title Formula;Text title Formula;Text title Formula;Interest for 2015 would be as follows;Text title Formula;Text title Formula;Total Formula;Total interest;Text title Formula;Text title Formula;Text title Formula;P16-3 (Stock-Option Plan) Berg Company adopted a stock-option plan on November 30, 2013, that;provided that 70,000 shares of $5.00 par value stock be designated as available;for the granting of options to officers of the corporation at a price of $9.00 a share. The;market price was $12.00 a share on November 30, 2014.;On January 2, 2014, options to purchase 28,000 shares were granted to president;Tom Winter - 15,000 for services rendered in 2014 and 13,000 for services to;be rendered in 2015. Also on that date, options to purchase 14,000 shares were;granted to vice president Michelle Bennett - 7,000 for services to be rendered in 2014 and;7,000 for services to be rendered in 2015. The market value of the stock was;$14 a share on January 2, 2014. The options were exercisable for a period of one year;following the year in which the services were rendered. The fair value of the options on the grant date;was $4 per option.;In 2015 neither the president nor the vice president exercised their options because the market price;of the stock was below the exercise price. The market value of the stock was $8;a share on December 31, 2015, when the options for 2014 services lapsed.;On December 31, 2016 both president Winter and vice president Bennett exercised their options for;13,000 and 7,000 shares, respectively, when the market price was;$16 a share.;Instructions;Prepare the necessary journal entries in 2013 when the stock-option plan was adopted, in 2014 when options were granted, in 2015 when options lapsed, and in 2016 when options were exercised.;Enter text answer here.;Jan 2, 14 Enter text answer as appropriate.;Dec 31, 14 Account title Amount;Account title Amount;Dec 31, 15 Account Title Amount;Account Title Amount;Dec 31, 15 Account Title Amount;Account Title Amount;Dec 31, 16 Account Title Amount;Account Title Amount;Account Title Amount;Account Title Amount

 

Paper#23923 | Written in 18-Jul-2015

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