1) Issued 20323000 par value 12% convertible bonds at 98if not convertible 95 Expenses of issusing 75000

2) Issued 20323000 par value 12% bonds at 971 detachable stock warrant was issued with each 100 par value

at time, warrants were selling for 5

3) Called convertible debt 13% 10149000 par value bonds were convertied into1014900 shares of 1 par value common stock

59000 unamortized discount applicable to bonds paid an additional 82700using book value method

Calculations1) 19916540

2) Value of Bonds Plus Warrants 19713310Value of Warrants 1016150Value of Bonds 18697160

3) 9075100

1) Cash 19916540Discount on Bonds Payable 406460 TRUE Bonds Payable 20323000

Unamortized Bond Issue Costs 75000 Cash 75000

2) Cash 19713310Discount on Bonds Payable 1625840 TRUE Bonds payable 20323000 Paid-in Capital-Stock Warrants 1016150

3) Debt Conversion Expense 82700Bonds Payable 10149000 Discount on Bonds Payable 59000 TRUE Common Stock 1014900 Paid-In Capital in Excess of Par - Common Stock 9075100 Cash 82700

Jan 1 201529000 Shares 12 Par at 21

exercisable in 5 yearsperiod for this award is 2 years FV option total compensation

April 1 20162900 options were terminated because of resigning employees

Market Value per share was 36

March 31 201717400 Options were exercised when the market price of the common stock was

12/31/2015 Paid-in Capital- Stock Options 2032004/1/2016 Compensation Expense 20320

12/31/2016 Paid-in Capital- Stock Options 1828803/31/2017 Cash 365400

Paid-in Capital- Stock Options 243840Unexerciesed Options 8700

1/1/2015 No Entry 0 No Entry 0

12/31/2015 Compensation Expense 203200 Paid-In Capital- Stock Options 203200

4/1/2016 Paid-In Cpaital- Stock Options 20320 Compensation Expense 20320

12/31/2016 Compensation Expense 182880 Paid-In Capital-Stock Options 182880

3/31/2017 Cash 365400Paid-In Capital-Stock Options 243840 Common Stock 208800 Paid-in Capital in Excess of Par- Common Stock 400440

Jan 1 2015per share

total compensation 406400

April 1 2016options were terminated because of resigning employees

March 31 2017Options were exercised when the market price of the common stock was 42 per share

4460400 9% 10 year Convertible Bonds on 6/1/2014plus accrued interest

200718 1512 discount per monthBonds Dated: 4/1/2014 378Interest Payable 1-Apr and 1-OctG1 Month 6B4 Month 4

4/1/2015 1672650 bonds were converted into 39600 shares ofAccrued interest was paid in cash at the time of conversion.

a) Prepare the entry to record interest expenses at 10/1/2014 assume that accrued interest payable was credited when the bonds were issued.

b) Prepare the entry to record the conversion on 4/1/2015 (Book Value Method is Used).Assume that the entry to record amortization of the bond discount and interest paymenthas been made.

a) Interest Payable 66906Interest Expense 135324 TRUE Discount on Bonds Payable 1512 Cash 200718

b) Bonds Payable 1672650 TRUE Discount on Bonds Payable 15309 Common Stock 712800 Paid-in Capital in Excess of Par - Common Stock 944541

99

Issue Price Months Remaining44604 118

18 par value common stock

assume that accrued interest

(Book Value Method is Used).Assume that the entry to record amortization of the bond discount and interest payment

10 year 4630000 8% 1/2/2014 Current Conversion Ratiopar value 1000 in 2

sold at 98 2014 Net Income 7500000straightline basis effective tax 35%and company had 2390000 shares outstanding during the entire year

Basic Earnings Per Share $3.14 Diluted Earnings Per Share $3.12

Maturity value 4630000Stated Rate 8%Cash Interest 370400

Net Income For Year 7500000 Discount Amort: 9260.00000000001Add Adj. Net Tax 246779 Interest Expense 379660

7746779 1-Tax Rate 65%After-Tax Interest 246779

4630 debentures20

92600 shares

15 / 1years 20 / 1

issuing 183700 Face Value of Bonds with coupon rate of 12%Warrants 133440 issued 1 for each 100 soldvalue without warrants 33360 bonds sold in market at issuance for 146000

a) Basic Formulas

Value Assigned to bonds 133440* 146000

133440 + 33360

Value Assigned to Warrants 33360* 146000

133440 + 33360

Total

Discount on Bonds Payable 66900

a) Cash 146000Discount on Bonds Payable 66900 Bonds Payable 183700 Paid-in Capital- Stock Warrants 29200

b) Cash 146000Discount on Bonds Payable 37700 Bonds Payable 183700

= 116800

= 29200

Total 146000

5/1/2014 issued 3170 1000 bonds at 102each was issued with 1 detachable stock warrant.After issuance the bonds were selling at 98 but fair vaule of the warrants cannot be determined

a) Prepare the entry to record the issance of the bonds and the warrants

Cash $3,233,400Discount on Bonds Payable $63,400 TRUE Bonds Payable $3,170,000 Paid-in Capital-Stock Warrant $126,800

b) Assume the same facts as (a), except the Fair Value is 22 Prepare the entry.

Cash $3,233,400Discount on Bonds Payable $7,593 TRUE Bonds Payable $3,170,000 Paid-in Capital- Stock Warrant $70,993

Market Value of Bonds without warrants 3106600Market Value of Warrants 69740Total Market Value 3176340

Value Assigned to Bonds 3162407

3106600 * 32334003176340

Value Assigned to Warrants 70993

69740 * 32334003176340

3233400

Issued 2940000 Convertible 10 year Bonds onBond Provided for 14% Interest Payable SemiannuallyThe discount in Connection with the issue was 39600

The Bonds are Convertible after 1 year into 8for each 1200 of bonds

8/1/2015 294000 of bonds were turned in for converstion into At the time of conversion, the accrued interest on bonds being converted is paid in CASH

Prepare the Journal enteries to record the conversion, amortization, and interest in connection with the bonds.

a) 8/1/2015 (Book Value method is used)b) 8/31/2015c) 12/31/2015 (including closing entries for end-of-year)

a) Discount on Bonds Payable 3531 Common Stock 196000Paid-in Capital in Excess of Par- Common Stock 94469 Cash 3430

a) Bonds Payable 294000 Discount on Bonds Payable 3531 Common Stock 196000 Paid-in Capital in Excess- Co. Stk. 94469

Interest Payable 3430 Cash 3430

b) Interest Expense 297Interest Payable 30870

Schedule 1full amount to be Amortized 39600Monthly amount 330months used 13.20 13 4290Balance on day before 35310Debenture converted 10% (3531)Balance on Day of 31779 Remaining Monthly 297

Schedule 2Amortization of bond discount charged to bond interest in year:

Month in A/8 First part of year 7 330 23108 end of year 5 297 1485

Total 3795

Interest on Bonds:Beg 411600

Monthly 34300Denbenture percent 370440Denbenture monthly 30870

Interest would be Total InterestFirst part of year 240100 3795end of year 154350 394450total 394450 398245

b) Interest Expense 297 Discount on Bonds Payable 297

Interest Expense 30870 Interest Payable 30870

c) Income Summary 398245 Interest Expense 398245

7/1/2014on 1-Jan and 1-JulAmortized monthly with Straight-line

share of 100 par value Common Stock

Common Stock Interest has been accrued monthlyAt the time of conversion, the accrued interest on bonds being converted is paid in CASH

Prepare the Journal enteries to record the conversion, amortization, and interest in connection with the bonds.

Determine the Basic and Diluted Earnings Per share

1) Authorized to Issue 7228800 shares 10 par value As of 12/31/2014 1807200 shares had been issued and were outstanding

2) The per share market prices of the common stock on selected dates were as follows:

7/1/2014 201/1/2015 214/1/2015 257/1/2015 118/1/2015 10.5

11/1/2015 912/31/2015 10

3) A total of 699600 shares of an authorized 13860007/1/2014

2098800 Par 25 Cum. Dividend of 3 per share

Conversion 1 preferred to 1 commonadjusted for splits and dividends

Dividends are quarterly 30-Sep 31-Dec 31-Mar 30-Jun

4) Subject to a 40% income tax rate

5) the after-tax net income for the year ended 12/31/2015 was

the following took place during the year

1) 1-Jan 5% common stock dividend was issued.903600 declared on 12/1/2014 for all stockholders as of 12/29/2014

2) 1-Apr 411600 shares of the 3 convertible was convertednew common was issued and old preferred was retired.

3) 1-Jul a 2 for 1 split of common stock became effective on this date. was authorized on 1-Jun

4) 1-Aug 285600 shares of common stock were issued to acquire a factory building

5) 1-Nov 30800 shares of common stock were purchased on the open markert atper share to be treasury stock, still held in treasury as of 12/31/2015

6) Common stock Cash Dividends declared and paid as follows15-Apr 0.3 per share15-Oct 0.2 per share

7) Preferred stock cash dividends cash dividends were decalred and paid as scheduled.

a) Event Dates (outstanding)Beg, Balanace (include 5% Stock Dividend) 1-Jan 1-AprConversion of Preferred stock 1-Apr 1-JulStock Split (2 for 1) 1-Jul 1-AugIssued Shares for building 1-Aug 1-NovPurchase of Treasury Stock 1-Nov 1-Dec Total number of Common Shares to Compute Basic

b) Number of Share to Compute Basic Earnings Per Share 4557257Convertible Preferred Stock - Still Outstanding 604800Convertible Preferred stock - Converted 216090Number of shares to compute diluted earnings per share 5378147

c) After-tax net income 12500000Preferred Stock Dividends March 31 524700 June 30 216000 Sept 30 216000 Dec 31 216000 648000 1172700Adjusted Net Income 11327300

Common Stockshares had been issued and were outstanding

The per share market prices of the common stock on selected dates were as follows:

shares of convertible preferred stock had been issued on

12500000

convertible was converted

shares of common stock were issued to acquire a factory building

shares of common stock were purchased on the open markert at 9

cash dividends were decalred and paid as scheduled.

Shares (outstanding) Restatement Fraction of year Weighted Shares1897560 2 1/4 $948,7802329740 2 1/4 $1,164,8704659480 1/12 $388,2904945080 1/4 $1,236,2704914280 1/6 $819,047

4557257

Issued 3330000 10 year 8% Convertible at 104

interest paid semiannually 30-Jun and 31-Dec

each 1000 debenture can be convered into 9 shares of

1-Jan-16 333000 of debentures are converted into common stock which is then selling atMarket of the common stock is then 117

Accrued interest at will be paid on the next interest date

12/31/2015 Interest Expense 127206 Premium on Bonds Payable 5994 Cash 133200

1/1/2016 Bonds Payable 333000 Premium on Bonds Payable 8525 Common Stock 311688 Paid-In Capital in Excess - Common Stock 29837

3/31/2016 Interest Expense 6423 Premium on Bonds Payable 237 Interest Payable 6660

3/31/2016 Bonds Payable 333000 Premium on Bonds Payable 8288 Common Stock 311688 Paid-In Capital in Excess- Common Stock 29600

6/30/2016 Interest Expense 101765 Premium on Bonds Payable 4795 Interest Payable 6660 Cash 113220

104 par value common stock after 31-Dec-15

which is then selling at 114 and additional 333000 are converted on 31-Mar-16

Accrued interest at will be paid on the next interest date