Purchase Solution

Journal entries

Not what you're looking for?

Ask Custom Question

Needed help on this work. Journal entries.

After reviewing the convertible securities, you realize that if everyone converted their securities to shares of stock, it would have a significant affect on the financial statements. The common stock is currently listed at $65 a share on the open market and the par value for each share is $5. Listed below are the potential securities that could be converted and the current value listed on the financial statements:
Financial Statement Listings
5 percent cumulative preferred stock - $100 par value $10,000,000
Additional paid-in capital - Preferred stock $5,000,000

Convertible bond payable (7 percent, 10-year bonds issued 7/1/06) $15,000,000
Discount on convertible bonds payable $1,125,000

Security Conversion Rate
100,000 shares of $100 par value preferred stock 3 shares of CS for each share
$1,000 convertible bond 20 shares of CS for each bond
The stock compensation plan grants the company's 1,000 employees the option to purchase 10 shares of stock annually. The strike price for the stock is based on current market price. This year the strike price will be $45.
Analyze the company's convertible securities. Prepare the journal entries that would be needed, if they were converted. Also, examine the company's proposed stock compensation plan, and compute the impact on the company's financial statements. In addition, update the log of issues to include this week's topics.

Purchase this Solution

Solution Summary

The solution explains the journal entries that would be made if all convertible securities are converted.

Purchase this Solution

Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.