E16-1 (Issuance and Conversion of Bonds). For each of the unrelated transactions described below, present the entry(ies) required to record each transaction.

E16-1 (Issuance and Conversion of Bonds). For each of the unrelated transactions described below, present the entry(ies) required to record each transaction.

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

2. Hoosier Company issued $10,000,000 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

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.

TUTORIAL PREVIEW

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

Cash ($20,000,000 × 0.99)	19,800,000
Discount on Bonds Payable	200,000

File name: E16-1 (Issuance and Conversion of Bonds).xls  File type: xls PRICE: $9