(esham 8) & nollsoup Shareholders' equity of Yiruna Toys Inc. (YTI), a public company, at December 31, 2020, was as foll

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Esham 8 Nollsoup Shareholders Equity Of Yiruna Toys Inc Yti A Public Company At December 31 2020 Was As Foll 1 (62.05 KiB) Viewed 32 times

(esham 8) & nollsoup Shareholders' equity of Yiruna Toys Inc. (YTI), a public company, at December 31, 2020, was as follows: Common shares, 1,350,000 shares outstanding Contributed surplus, stock option plan Retained earnings 34,600,000 270,000 12,450,000 On January 2, 2021, YTI issued $20,000,000 of 6% convertible bonds. The bonds mature on December 31, 2035 (15 years total), and pay interest on June 30 and December 31 of each year. The total proceeds received on the sale of the bonds were $20,350,000, and the fair value of the bonds at this date was calculated as $19,613,010. Each $1,000 bond is convertible into 20 common shares at any time. YTI's employee stock option plan was initiated on January 1, 2019, and vested on December 31, 2021. The fair value of the options on the initiation date was $450,000. On December 31, 2020, YTI's management estimated that 90% of the options would vest. A total of 92% of the 100,000 options issued actually vested. Also on December 31, 2021, 60% of the vested options were exercised at an exercise price of $12. Required: a) Prepare the journal entry to record the issuance of the convertible bonds. (2 marks) b) Prepare the journal entries for December 31, 2021, relating to the employee stock option plan. (4 marks)