Required - In accordance with IAS 33 Earnings per share a. Compute basic earnings per share for 2019, b. Compute diluted earnings per share for 2019 , c. State the Presentation and Disclosure requirements The information below pertains to Rainfall plc for 2019. Net Income for the year 8% convertible bonds issued at par ($1,000 per bond); $2,000,000 each bond is convertible into 30 shares of ordinary shares; the liability component of the bonds is $1,800,000 based on a market rate of 9% 6% convertible, cumulative preference shares, $100 par value; each share is convertible into 3 shares of ordinary shares. Ordinary shares, $10 par value $1,200,000 $4,000,000 $6,000,000 Tax rate for 2019 40% Average market price of ordinary shares $25 per share
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- Waseca Company had 5 convertible securities outstanding during all of 2019. It paid the appropriate interest (and amortized any related premium or discount using the straight line method) and dividends on each security during 2019. Each of the convertible securities is described in the following table: Additional data: Net income for 2019 totaled 119,460. The weighted average number of common shares outstanding during 2019 was 40,000 shares. No share options or warrants arc outstanding. The effective corporate income tax rate is 30%. Required: 1. Prepare a schedule that lists the impact of the assumed conversion of each convertible security on diluted earnings per share. 2. Prepare a ranking of the order in which each of the convertible securities should be included in diluted earnings per share. 3. Compute basic earnings per share. 4. Compute diluted earnings per share. 5. Indicate the amount(s) of the earnings per share that Waseca would report on its 2019 income statement.Refer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.On July 2, 2018, McGraw Corporation issued 500,000 of convertible bonds. Each 1,000 bond could be converted into 20 shares of the companys 5 par value stock. On July 3, 2020, when the bonds had an unamortized discount of 7,400 and the market value of the McGraw shares was 52 per share, all the bonds were converted into common stock. Required: 1. Prepare the journal entry to record the conversion of the bonds under (a) the book value method and (b) the market value method. 2. Compute the companys debt-to-equity ratio (total liabilities divided by total shareholders equity, as described in Chapter 6) under each alternative. Assume the companys other liabilities are 2 million and shareholders equity before the conversion is 3 million. 3. Assume the company uses IFRS and issued the bonds for 487,500 on July 2, 2018. On this date, it determined that the fair value of each bond was 930 and the fair value of the conversion option was 45 per bond. Prepare the journal entry to record the issuance of the bonds.
- Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually on March 31 and September 30. Assume an effective yield rate of 14%. Required: 1. Prepare a bond interest expense and discount amortization schedule using the straight-line method. 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. If income before interest and income taxes of 30% in 2020 is 500,000, compute net income under each alternative. 5. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight line method of amortization b. effective interest method of amortization 6. Compute the companys times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative.If the company issued RO 100,000 , 5% interest, 10-year bonds at 98 on January 1, 2021, which of the following is the correct accounting entry on the date of issuance? a. the company will record premium on bonds payable, RO 200 b. the company will record discount on bonds payable, RO 2,000 c. the company will record premium on bonds payable, RO 2,000 d. the company will record discount on bonds payable, RO 200Part 1 -- Bonds:1. National Company issued 7% bonds, dated January 1, with a face amount of $700,000 on January 1, 2019. The bonds mature on December 31, 2027. The market yield for bonds of similar risk and maturity was 5%. Interest is made semiannually on June 30 and December 31.REQUIRED: a.Determine the price of the bonds at January 1, 2019 (be certain to include all of the “Given” information as discussed in class). b.Prepare a bond amortization table using the effective interest method (as reviewed in class), and make certain to obtain totals for the columns of Cash Interest Paid, Interest Expense, and Premium Amortization. c.Prepare the journal entry to record their issuance by National Company on January 1, 2019. d.Prepare the journal entry recording the first interest payment on June 30, 2019. e.Prepare the journal entry recording the interest payment on December 31, 2019. f.Prepare journal entries at maturity on December 31, 2027. g.Prepare the journal entry to record the…
- Part 1 -- Bonds: National Company issued 7.5% bonds, dated January 1, with a face amount of $650,000 on January 1, 2019. The bonds mature on December 31, 2027. The market yield for bonds of similar risk and maturity was 5.5%. Interest is paid semiannually on June 30 and December 31. REQUIRED: Determine the price of the bonds at January 1, 2019 (be certain to include all of the “Given” information as discussed in class). Prepare a bond amortization table using the effective interest method (as reviewed in class), and make certain to obtain totals for the columns of Cash Interest Paid, Interest Expense, and Premium Amortization. Prepare the journal entry to record their issuance by National Company on January 1, 2019. Prepare the journal entry recording the first interest payment on June 30, 2019. Prepare the journal entry recording the interest payment on December 31, 2019. Prepare journal entries at maturity on December 31, 2027. Prepare the journal entry to record the…3. Green Corporation issued a P4, 000,000 of 6% bonds on May 1, 2019. The bonds were dated January 1, 2019, and mature January 1, 2024, with interest payable July and January. The bonds were issued at face value plus accrued interest. Prepare Green’s journal entries for (a) the May issuance (b) the July 1 interest payment (c) December 31 adjusting entry.On January 1, 2019, Ola Company paid $388,900 for a $400,000 face value 3% corporate bond yielding 4%, interest paid annually on December 31, and classified it as held-to-maturity. Ola's reporting year ends December 31. On its 2020 balance sheet, Ola reports the investment at: Select one: O A. $396,154 B. $398,231 C. $397,296 4 D. $395,981
- b) The following section is taken from Nolana Sdn Bhd's statement of financial position at December 31, 2020. Current liabilities RM Interest Payable 180,000 Non-current liabilities Bonds Payable, 9%, due January 1, 2025 4,000,000 Interest is payable semi-annually on January 1 and July 1. The bonds are callable on any interest date. Required: i. Journalize the payment of the bond interest on January 1, 2021. ii. Assume that on January 1, 2021, after paying interest, Nolana Sdn Bhd calls bonds having a face value of RM1,600,000. The call price is 104. Record the redemption of the bonds.On Feb. 1, 2021, ABC purchased P2,000,000 face value bonds at 97 plus accrued interest. It was acquired for trading purposes and is accounted as FA‐FV‐PL The bonds mature on Sept. 1, 2023. Interest at 8% per annum is paid every Mar. 31 and Sept. 1. On Dec. 31, 2021, the bonds were selling at 96. Identify the following in good accounting form:A. Investment in Bonds as of acquisition B. Interest income for the year C. Unrealized Holding Gain/Loss through P/L for year 2021 D. Investment in Bonds as of Dec. 31, 2021The December 31, 2020, balance sheet of Kepler Corp. is as follows. 10% callable, convertible bonds payable (semiannual interest dates April 30 and October 31; convertible into 6 shares of $25 par value common stock per $1,000 of bond principal; maturity date April 30, 2026) $500,000 Discount on bonds payable 10,240 $489,760 On March 5, 2021, Kepler Corp. called all of the bonds as of April 30 for the principal plus interest through April 30. By April 30, all bondholders had exercised their conversion to common stock as of the interest payment date. Consequently, on April 30, Kepler Corp. paid the semiannual interest and issued shares of common stock for the bonds. The discount is amortized on a straight-line basis. Kepler uses the book value method. Instructions Prepare the entry(ies) to record the interest expense and conversion on April 30, 2021. Reversing entries were made on January 1, 2021. (Round to the nearest dollar.)