Issuance and conversion of bonds

Task: Issuance and Conversion of Bonds

For each of the unrelated transactions described below, present the entry(ies) required to record each transaction.

Problem: 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.

Problem 2. Hoosier Company issued \$20,000,000 par value 10% bonds at 98. One detachable stock purchase warrant was issued with each \$100 par value bond. At the time of issuance, the warrants were selling for \$4.

Problem 3. Sepracor, Inc. called its convertible debt in 2007. 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, 2007. 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.

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##### Reference No:- TGS01806687

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