71) Immediately after the last interest payment, Henry Company converted $3,000,000 of its bonds into 300,000 shares of $10 par value common stock. The unamortized premium on the bonds at the date of the conversion was $870,000. As a result of this conversion:
A) liabilities decreased by $3,870,000 and stockholders' equity increased by $3,000,000.
B) liabilities decreased by $3,000,000 and stockholders' equity increased by $3,000,000.
C) liabilities decreased by $3,870,000 and stockholders' equity increased by $3,870,000.
D) liabilities decreased by $870,000 and stockholders' equity increased by $870,000.
72) Marshall Corporation has $30,000 of bonds outstanding with a carrying value of $38,400. The bonds are converted into 15,000 shares of $1 par value common stock immediately after the last interest payment. The common stock had a market value of $5 per share on the date of conversion. The entry to record the conversion would include a credit to:
A) Common Stock for $15,000 and credit to Paid-in Capital in Excess of Par for $8,400.
B) Bonds Payable for $30,000 and credit to Premium on Bonds Payable for $8,400.
C) Cash for $38,400.
D) Common Stock for $15,000 and credit to Paid-in Capital in Excess of Par for $23,400.
73) Lloyd Corporation has $2,400,000 of bonds outstanding with an unamortized premium of $120,000 immediately following the last interest payment. At that time, the bonds were converted into 250,000 shares of $10 par value common stock. As a result of this conversion:
A) liabilities decreased by $2,280,000 and stockholders' equity increased by $2,280,000.
B) liabilities decreased by $2,400,000 and stockholders' equity increased by $2,400,000.
C) liabilities decreased by $2,520,000 and stockholders' equity increased by $2,520,000.
D) liabilities increased by $2,280,000 and stockholders' equity increased by $2,280,000.
74) Secured bonds are:
A) also called mortgage bonds.
B) also called serial bonds.
C) bonds that give the holder the right to take specified assets of the issuer in the event the issuer fails to pay interest or principal.
D) A and C.
75) Bonds that mature on a single date are called ________. Bonds that mature on multiple dates are called ________.
A) mortgage bonds; serial bonds
B) serial bonds; mortgage bonds
C) debentures; special bonds
D) term bonds; serial bonds
76) Unsecured bonds are called ________. Secured bonds are called ________.
A) convertible bonds; callable bonds
B) term bonds; serial bonds
C) debentures; mortgage bonds
D) regular bonds; special bonds
77) If bonds have been issued at a discount, the ________ over the life of the bonds.
A) carrying value of the bonds will decrease
B) interest payment will increase
C) interest expense will decrease
D) interest expense will increase
78) Darla's Cookie Emporium borrowed money by issuing $200,000 of bonds at 96 on January 1, 2014. The bonds pay interest on January 1 and July 1. The stated rate of interest is 5% and the bonds mature in 10 years. Any discount or premium is amortized using the straight-line method.
Required:
Prepare journal entries on the following dates:
1. January 1, 2014
2. July 1, 2014
3. December 31, 2014, the fiscal year end
4. January 1, 2015
5. January 1, 2024
Omit explanations.