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ACC - Universal Coat Company and Hooker Financial Corporation Problem




Question;(Issuance of Bonds with Detachable Warrants) On December 1, 2014, Universal Coat Company sold 10,000 of its 10%, 15-year, $1,000 face value, nonconvertible bonds with detachable stock warrants at 102. Each bond carried three detachable warrants. Each warrant was for one share of common stock at a specified option price of $27 per share. Shortly after issuance, the warrants were quoted on the market for $2.50 each. No market value can be determined for the Universal Coat Company bonds. Interest is payable on December 1 and June 1. Bond issue costs of $65,000 were incurred.Instructions Prepare in general journal format the entry to record the issuance of the bonds.(AICPA adapted)***********(Issuance, Exercise, and Termination of Stock Options) On July 1, 2013, Hooker Financial Corporation granted 50,000 options to key executives. Each option allows the executive to purchase one share of Hooker?s $1 par value common stock at a price of $58 per share. The options were exercisable within a 2-year period beginning July 1, 2015, if the grantee is still employed by the company at the time of the exercise. On the grant date, Hooker?s stock was trading at $50 per share, and a fair value option-pricing model determines total compensation to be $350,000.On July 1, 2015, 35,000 options were exercised when the market price of Hooker?s stock was $65 per share. The remaining options lapsed in 2015 because executives decided not to exercise their options.InstructionsPrepare the necessary journal entries related to the stock option plan for the years 2013 through 2017.="p0">


Paper#40487 | Written in 18-Jul-2015

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