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On March 1, 2018, Ron Corporation issued $150,000 of 8%nonconvertible bonds with detachable stock warrants at 104, whichare due on February 28, 2038. Each $1,000 bond was issued with 25detachable stock warrants, each of which entitled the bondholder topurchase for $50 one share of Ron common stock, par value $10. Thebonds without the warrants would normally sell at 96. On March 1,2018, the fair value of Ron’s common stock was $40 per share andthe market value of the warrants was $3.00 per warrant. What amountshould Ron record on March 1, 2018 as paid-in capital from stockwarrants?

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Jamar Ferry
Jamar FerryLv2
28 Sep 2019

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On March 1, 2010, Ruiz Corporation issued $800,000 of 8%nonconvertible bonds at 104, which are due on February 28, 2030. Inaddition, each $1,000 bond was issued with 25 detachable stockwarrants, each of which entitled the bondholder to purchase for $50one share of Ruiz common stock, par value $25. The bonds withoutthe warrants would normally sell at 95. On March 1, 2010, the fairmarket value of Ruiz's common stock was $40 per share and the fairmarket value of the warrants was $2.00. What amount should Ruizrecord on March 1, 2010 as paid-in capital from stockwarrants?

1. (TCO A) On July 1, 2010, an interest paymentdate, $60,000 of Parks Co. bonds were converted into 1,200 sharesof Parks Co. common stock, each having a par value of $45 and amarket value of $54. There is $2,400 unamortized discount on thebonds. Using the book value method, Parks would record (Points :5)

no change in paid-incapital in excess of par.
a $3,600 increase in paid-incapital in excess of par.
a $7,200 increase in paid-incapital in excess of par.
a $4,800 increase in paid-incapital in excess of par.


Question 2. 2. (TCO A) On March 1, 2010, RuizCorporation issued $800,000 of 8% nonconvertible bonds at 104,which are due on February 28, 2030. In addition, each $1,000 bondwas issued with 25 detachable stock warrants, each of whichentitled the bondholder to purchase for $50 one share of Ruizcommon stock, par value $25. The bonds without the warrants wouldnormally sell at 95. On March 1, 2010, the fair market value ofRuiz's common stock was $40 per share and the fair market value ofthe warrants was $2.00. What amount should Ruiz record on March 1,2010 as paid-in capital from stock warrants?
(Points : 5)

$28,800

$33,600

$41,600

$40,000

Question 3. 3. (TCO A) On January 1, 2010,Trent Company granted Dick Williams, an employee, an option to buy100 shares of Trent Co. stock for $30 per share, the optionexercisable for 5 years from date of grant. Using a fair valueoption pricing model, total compensation expense is determined tobe $900. Williams exercised his option on September 1, 2010, andsold his 100 shares on December 1, 2010. Quoted market prices ofTrent Co. stock during 2010 were as follows:

January1 $30 per share
September1 $36 per share
December1 $40 per share

The service period is for 2 years, beginning January 1, 2010. As aresult of the option granted to Williams, using the fair valuemethod, Trent should recognize compensation expense for 2010 on itsbooks in the amount of (Points : 5)

$1,000.

$900.

$450.

$0.

Question 4. 4. (TCO A) Wonderful Inc. issued toits existing common stockholders 2000 warrants. Each warrantentitles the stockholder to purchase 3 shares of common stock at aprice of $4 each. The common stock of the company is selling in thestock exchange at $6 each. If Wonderful has 20,000 shares of commonstock outstanding throughout the year and its Net Income is $8,000after paying the preferred dividends, what will be the dilutive EPSof Wonderful incorporation under treasury stock method? Round youranswer to two decimal points. (Points : 5)

$4
$0.40

$0.30

$0.36

Question 5. 5. (TCO A) At December 31, 2011 and2010, Miley Corp. had 180,000 shares of common stock and 10,000shares of 5%, $100 par value cumulative preferred stockoutstanding. No dividends were declared on either the preferred orcommon stock in 2011 or 2010. Net income for 2011 was $400,000. For2011, earnings per common share amounted to (Points : 5)

$2.22.
$1.94.
$1.67.
$1.11.

On July 1, 2018, Jack Company issued for $8400000 a total of80,000 shares of $100 par value, 7% noncumulative preferred stockalong with one detachable warrant for each share issued. Each sharewarrant contains right to purchase one share of Jack 10 par valuecommon stock for $15 per share. The stock without the warrantswould normally sell for 8200,000. The market price of the rights onJuly 1 2018 was 2.50 per right. On October 31, 2018 when the marketprice of the common stock was 19 per share and the market value ofthe rights was 3.00 per right. 32,000 rights were exercised.

A) Prepare entry to record the issuance on7/1/2018.

B)As a result of the exercise of the 32,000 rights andthe issuance of the related common stock, what journal entry wouldJack make?

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