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Match each description below to the appropriate term (a-g).

A measure of income earned by each share of common stock

All bonds in the same bond issue mature on the same date

The value of a bond stated on the bond certificate

The legal contract between the issuer and the bond holder

Allows the issuer to redeem bonds before maturity date

Bonds in the same bond issue mature at different dates.

Allows the bond holder to exchange bond for shares of stock
a.

EPS
b.

face value
c.

callable bond
d.

indenture
e.

term bonds
f.

convertible bond
g.

serial bonds

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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7. The future value of equal semi-annual payments of $500 at 8%compounded semiannually for 4 years is HINT: FV of Annuity of $1The solution to this problem requires time value of moneycalculations. Reference to Tables 9-1 through 9-4 in the text isnecessary to complete the calculations.

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PLEASE ANSWER QUESTION A PART 1 and 2 QUESTION B Part 1 and 2and QUESTION C Part 1

Pleae complete it on excel or copy paste it from excel

A.

ClassCo sells Convertible Bond with warrant to convert intostock

Bond with face

$1,000

Face Rate

8.00%

Term

3

Yrs.

Market rate @ sale

8.50%

issued:

6/30/2018

maturity

6/30/2021

Interest paid annually

Bond sold for

996.00

Part 1) determine value received from sale, Discount orPremium?

Part 2) Prepare JE to record sale, use incremental

assume value of Bond in the known

and value of warrant is incremental

B.

ClassCo:

PE 12/31/2018

Fiscal = calendar Yr.

Net income: after tax

2000

shares:

Beginning:

505

3/1 issue

50

9/1 issue

60

Treasury Purchase 10/30

(24)

on 11/22, 3 for 1 split

Preferred dividends this year =

250

Part 1) Calculate EPS

Part 2) using "as if" compute EPS & dilutiveeffect of Convertible Bonds

issued 10 bonds , $1000 bonds issued prior yr., 6%, each bondwas convertible into 30 shares

40% tax rate for bonds

C.

NET Income:

4500

No preferred stock

Average # of Shares

2200

EPS =

2.045

Stock Options:

all full Yr.

# option shares

500

0ption price per share

$18

Market at PE being measured

$32

Part 1

Compute dilutive effect per share

Bradley-Link’s December 31, 2016, balance sheet included thefollowing items: Long-Term Liabilities ($ in millions) 8.0%convertible bonds, callable at 102 beginning in 2017, due 2020 (netof unamortized discount of $6) [note 8] $144 11.0% registered bondscallable at 105 beginning in 2026, due 2030 (net of unamortizeddiscount of $2) [note 8] 52 Shareholders’ Equity 5 Equity—stockwarrants Bonds (in part) The 8.0% bonds were issued in 2003 at 96.0to yield 10%. Interest is paid semiannually on June 30 and December31. Each $1,000 bond is convertible into 50 shares of the Company’sno par common stock. The 11.0% bonds were issued in 2007 at 103 toyield 10%. Interest is paid semiannually on June 30 and December31. Each $1,000 bond was issued with 50 detachable stock warrants,each of which entitles the holder to purchase one share of theCompany’s no par common stock for $30, beginning 2017. On January3, 2017, when Bradley-Link’s common stock had a market price of $37per share, Bradley-Link called the convertible bonds to forceconversion. 90% were converted; the remainder were acquired at thecall price. When the common stock price reached an all-time high of$42 in December of 2017, 40% of the warrants were exercised.Required: 1. Prepare the journal entries that were recorded wheneach of the two bond issues was originally sold in 2003 and 2007 2.Prepare the journal entry to record (book value method) theconversion of 80% of the convertible bonds in January 2017 and theretirement of the remainder. 3. Assume Bradley-Link inducedconversion by offering $120 cash for each bond converted. Preparethe journal entry to record (book value method) the conversion of90% of the convertible bonds in January 2017. 4. AssumeBradley-Link induced conversion by modifying the conversion ratioto exchange 55 shares for each bond rather than the 50 sharesprovided in the contract. Prepare the journal entry to record (bookvalue method) the conversion of 80% of the convertible bonds inJanuary 2017. 5. Prepare the journal entry to record the exerciseof the warrants in December 2017

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