Chapter 16 Week 6 Homework

E16-1

1. Cash ($10,000,000 X .99) 9,900,000 Discount on Bonds Payable 100,000 Bonds Payable 10,000,000

Unamortized Bond Issue Costs 70,000 Cash 70,000

2. Cash ($10,000,000 X .98) 9,800,000 Discount on Bonds Payable 600,000 Bonds Payable 10,000,000 Paid-in Capital – Stock Warrants (100,000 X $4) 400,000

3. Debt Conversion Expense 75,000 Bonds Payable 10,000,000 Discount on Bonds Payable 55,000 Common Stock 1,000,000 Paid-in Capital in Excess of Par 8,945,000 [($10,000,000 - $55,000) - $1,000,000] Cash 75,000

E16-6

(a) December31, 2012:
Bond Interest Expense 117,000
Premium on Bonds Payable ($60,000 X 1/20) 3,000 Cash ($3,000,000 X 8% X 6/12) 120,000

(b) January 1, 2013:
Bonds Payable 600,000
Premium on Bonds Payable 9,600 Common Stock [8 X $100 X ($600,000 / $1,000)] 480,000 Paid-in Capital in Excess of Par 129,600

Total Premium ($3,000,000 X.02) $60,000 Premium Amortized ($60,000 X 2/10) 12,000 Balance $48,000

Bonds Converted ($600,000 / $3,000,000) 20% Related Premium ($48,000 X 20%) $9,600

(c) March 31, 2013:
Bond Interest Expense 11,700
Premium on Bonds Payable ($9,600 / 8) X 3/12 300 Bond Interest Payable ($600,000 X 8% X 3/12) 12,000

Bond Payable 600,000
Premium on Bonds Payable 9,300 Common Stock 480,000 Paid-in Capital in Excess of Par 129,300

Premium as of January 1, 2013 for $600,000 of bonds 49,600 Less: $9,600 / 8 years X 3/12 300 Premium as of March 31, 2013 for $600,000 of bonds $9,300

(d) June 30, 2013:
Bond Interest Expense 70,200
Premium on Bonds Payable 1,800
Bond Interest Payable