Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) On January 1, 2007, Brewster Company issued 2,000 of its 5-year $1000 face value, 11% bonds dated January 1 at effective annual interest rate (yield) of 9%. Interest is payable each December 31. Brewster uses effective-interest method of amortization. On December 31, 2008, 2000 bonds were extinguished early through acquisition in open market by Brewster for $1,980,000 plus accrued interest.

On July 1, 2007 Brewster issued 5,000 of its 6-year $1000 face value= 10% convertible bonds dated July 1 at effective annual interest rate (yield) of= 12%. Interest is payable every June 30 and December 31. Bonds are convertible at investors option into Brewster's common stock at ratio of 10 shares of common stock for each bond. On July 1. 2008 an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewster's common stock, that had fair market value of $105 and par value of $1 at the date of conversion.

1. Create all essential journal entries for inssuer and investor to record issuance of both the 11% and the 10% bonds. Ignore any potential impact of year to year market value changes on investor accounting for bond.

2. Prepare all essential journal entries to record early extinguishment of both debt instruments assuming:

a. Brewster considered conversion to be important culminating event, and investors considered their investment in convertible bonds to be debt rather than equity.

b. Brewster considered conversion to be a nonculminating event, and investors considered their investment in convertible bonds to be equity rather than debt.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M918874

Have any Question? 


Related Questions in Accounting Basics

Write a paper about internal controlsassignmentcontent

Write a paper about internal controls Assignment Content Page - Introduction - Definition of internal controls(Books) - Components of internal control system(Books) - Examples of internal controls(Books or research paper ...

1 identify an industry to focus on it is suggested that you

1) Identify an industry to focus on (It is suggested that you use an industry that is expanding rather than consolidating, but the choice is yours to make). Explain why you chose this industry and its environment. 2) Ide ...

Accounting discussion questionbulluse the internet to

Accounting Discussion Question • Use the Internet to research an annual report of a retail company. • Then, imagine you are an investor or creditor; suggest the ratios that you believe would provide an investor or credit ...

Sandy alomar corp prepare two schedules for inventory costs

Sandy Alomar Corp., Prepare two schedules for inventory costs under LIFO and FIFO You are vice-president of finance of Sandy Alomar Corp., a retail company that prepared 2 different schedules of gross margin for the firs ...

Key information for the plant city divisionkey information

Key Information For The Plant City Division Key information for the Plant City Division (PCD) of Barkley Industries for 2015 are as follows: Revenues $15,000,000 Operating Income 1,800,000 Total Assets 10,000,000 PCD man ...

Almas recording studio rents studio time to musicians in

Alma's Recording Studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipate ...

Assignment lasa ipo presentation amp myaccountinglab

Assignment: LASA: IPO Presentation & MyAccountingLab Post-Tests This assignment will consist of two parts. Part I: IPO Presentation: You work for a medium sized privately held electronics firm which is considering transi ...

Assignmentapplication break-even analysiswhen expenses and

Assignment Application: Break-Even Analysis When expenses and revenues are equal, this is known as the "break-even point" or BEP. To determine break-even, an examination of fixed and variable costs (expenses) in relation ...

Analyze tootsie rolls 2015 consolidated statements of

Analyze Tootsie Roll's 2015 Consolidated Statements of Earnings and Retained Earnings. Discuss the relevance for a manufacturer of reporting a gross profit amount. Then calculate or report the 2015 Gross Profit Rate (%) ...

Accounting assignmentthree personal trainers at an upscale

Accounting Assignment Three personal trainers at an upscale health spa / resort in Sedona, Arizona, want to start a health club that specializes in health plans for people in the 50+ age range. The trainers Donna Rinaldi ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen