- On September 30 2020 Wildhorse Inc Issued 3 900 000 Of 10 Year 9 Convertible Bonds For 4 480 000 The Bonds Pay I 1 (45.12 KiB) Viewed 7 times
On September 30, 2020, Wildhorse Inc. issued $3,900,000 of 10-year, 9% convertible bonds for $4,480,000. The bonds pay interest on March 31 and September 30 and mature on September 30, 2030. Each $1,000 bond can be converted into 80 no par value common shares. In addition, each bond included 20 detachable warrants. Each warrant can be used to purchase one common share at an exercise price of $13. Immediately after the bond issuance, the warrants traded at $3.00 each. Without the warrants and the conversion rights, the bonds would have been expected to sell for $4,100,000. On March 23, 2023, half of the warrants were exercised. The common shares of Wildhorse Inc. were trading at $20 each on this day. Immediately after the payment of interest on the bonds, on September 30, 2025, all bonds outstanding were converted into common shares. Assume the entity follows IFRS. Prepare the journal entry to record the issuance of the bonds on September 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation September 30, 2020 A Debit Credit
Using (1) a financial calculator or (2) Excel functions, calculate the effective rate (yield rate) for the bonds. (Round answer to 4 decimal places, e.g. 5.2500%.) Semi-annual effective rate eTextbook and Media List of Accounts %
Prepare a bond amortization schedule from September 30, 2020, to September 30, 2025, using the effective interest rate. (Round answers to O decimal places, e.g. 5,275.) Date Sept. 30, 2020 Mar. 31, 2021 $ Sept. 30, 2021 Mar. 31, 2022 Sept. 30, 2022 Mar. 31, 2023 Sept. 30, 2023 Mar. 31, 2024 Sept. 30, 2024 Mar. 31, 2025 Sept. 30, 2025 Cash Paid Schedule of Bond Premium Amortization Effective Interest Method $ LA Effective Interest LA Premium Amortized +A
$ LA Carrying Amount ▬▬▬▬
Prepare the December 31, 2020 year-end adjusting journal entries and the payment of interest on March 31, 2021. Assume that Wildhorse Inc. does not use reversing entries. For amortization of premium, pro-rate using number of months. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Date December 31, 2020 March 31, 2021 Account Titles and Explanation Debit Credit
Prepare the journal entry to account for the exercise of the warrants on March 23, 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation March 23, 2023 How many common shares were issued in this transaction? Common shares issued shares Debit Credit
Prepare the journal entry to account for the bond redemption on September 30, 2025. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) Date Account Titles and Explanation September 30, 2025 Debit Credit
How many shares were issued on September 30, 2025? Shares issued shares Calculate the minimum market value of the common shares as of the date of the conversion, September 30, 2025. (Round answer to 2 decimal places, e.g. 52.75.) Minimum market value $