Accuracy is a must.

On January 1, 2014, Gottlieb Corporation issued $4,360,000 of 10-year, 8% convertible debentures at 104. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be converted into 9 shares of Gottlieb Corporation $104 par value common stock after December 31, 2015. On January 1, 2016, $436,000 of debentures are converted into common stock, which is then selling at $116. An additional $436,000 of debentures are converted on March 31, 2016. The market price of the common stock is then $119. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis. Make the necessary journal entries for:

(a)		December 31, 2015.		(c)		March 31, 2016.
(b)		January 1, 2016.		(d)		June 30, 2016.

Record the conversions using the book value method.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Dec. 31, 2015
(b)	Jan. 1, 2016
(c)	Mar. 31, 2016
		(To record interest expense)
	Mar. 31, 2016
		(To record the conversion)
(d)	Jun. 30, 2016

Exercise 16-7

Illiad Inc. has decided to raise additional capital by issuing $176,800 face value of bonds with a coupon rate of 11%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $148,320, and the value of the warrants in the market is $16,480. The bonds sold in the market at issuance for $162,000. (a) What entry should be made at the time of the issuance of the bonds and warrants?  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

(b) Prepare the entry if the warrants were nondetachable.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

Exercise 16-10

On November 1, 2014, Olympic Company adopted a stock-option plan that granted options to key executives to purchase 66,500 shares of the company’s $13 par value common stock. The options were granted on January 2, 2015, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $50, and the fair value option-pricing model determines the total compensation expense to be $712,500. All of the options were exercised during the year 2017: 49,875 on January 3 when the market price was $67, and 16,625 on May 1 when the market price was $78 a share. Prepare journal entries relating to the stock-option plan for the years 2015, 2016, and 2017. Assume that the employee performs services equally in 2015 and 2016.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
1/2/15
12/31/15
12/31/16
1/3/17
5/1/17

Exercise 16-13

Derrick Company issues 4,760 shares of restricted stock to its CFO, Dane Yaping, on January 1, 2014. The stock has a fair value of $124,100 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Yaping stays with the company for 4 years. The par value of the stock is $4. At December 31, 2015, the fair value of the stock is $148,100. (a) Prepare the journal entries to record the restricted stock on January 1, 2014 (the date of grant), and December 31, 2015.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
1/1/14
12/31/15

(b) On March 4, 2016, Yaping leaves the company. Prepare the journal entry to account for this forfeiture.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
3/4/16
Click if you would like to Show Work for this question:	Open Show Work

Exercise 16-15 (Part Level Submission) Newton Inc. uses a calendar year for financial reporting. The company is authorized to issue 9,053,000 shares of $12 par common stock. At no time has Newton issued any potentially dilutive securities. Listed below is a summary of Newton’s common stock activities. 1. Number of common shares issued and outstanding at December 31, 2012 2,507,000 2. Shares issued as a result of a 12% stock dividend on September 30, 2013 300,840 3. Shares issued for cash on March 31, 2014 2,148,000 Number of common shares issued and outstanding at December 31, 2014 4,955,840 4. A 2-for-1 stock split of Newton’s common stock took place on March 31, 2015

(a) Compute the weighted-average number of common shares used in computing earnings per common share for 2013 on the 2014 comparative income statement.  shares

Exercise 16-20

On January 1, 2014, Lennon Industries had stock outstanding as follows.

6% Cumulative preferred stock, $105 par value,   issued and outstanding 11,000 shares		$1,155,000
Common stock, $11 par value, issued and   outstanding 288,000 shares		3,168,000

To acquire the net assets of three smaller companies, Lennon authorized the issuance of an additional 196,800 common shares. The acquisitions took place as shown below.

Date of Acquisition		Shares Issued
Company A April 1, 2014		76,800
Company B July 1, 2014		94,800
Company C October 1, 2014		25,200

On May 14, 2014, Lennon realized a $108,000 (before taxes) insurance gain on the expropriation of investments originally purchased in 2000. On December 31, 2014, Lennon recorded net income of $408,000 before tax and exclusive of the gain. Assuming a 49% tax rate, compute the earnings per share data that should appear on the financial statements of Lennon Industries as of December 31, 2014. Assume that the expropriation is extraordinary.  (Round answer to 2 decimal places, e.g. $2.55.)

Lennon Industries Income Statement For the year ended December 31, 2014
		$
		$

Exercise 16-25

On January 1, 2014, Crocker Company issued 10-year, $3,302,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 24 shares of Crocker common stock. Crocker’s net income in 2014 was $297,000, and its tax rate was 45%. The company had 110,000 shares of common stock outstanding throughout 2014. None of the bonds were converted in 2014. (a) Compute diluted earnings per share for 2014.  (Round answer to 2 decimal places, e.g. $2.55.)

Diluted earnings per share

$

(b) Compute diluted earnings per share for 2014, assuming the same facts as above, except that $1,100,000 of 6% convertible preferred stock was issued instead of the bonds. Each $100 preferred share is convertible into 5 shares of Crocker common stock.  (Round answer to 2 decimal places, e.g. $2.55.)

Diluted earnings per share

$

Exercise 16-29

On December 31, 2010, Beckford Company issues 128,000 stock-appreciation rights to its officers entitling them to receive cash for the difference between the market price of its stock and a pre-established price of $10. The fair value of the SARs is estimated to be $5 per SAR on December 31, 2011; $2 on December 31, 2012; $11 on December 31, 2013; and $10 on December 31, 2014. The service period is 4 years, and the exercise period is 7 years. (a) Prepare a schedule that shows the amount of compensation expense allocable to each year affected by the stock-appreciation rights plan.  (If the compensation decreases from prior year enter the amount as a negative number in the table e.g. -25,000 or (25,000).)

Date

Fair Value

Cumulative Compensation Recognizable

Percentage Accrued

Compensation Accrued to Date

Expense 2011

Expense 2012

Expense 2013

Expense 2014

12/31/11

$

$

%

$

$

$

$

$

12/31/12

%

12/31/13

%

12/31/14

%

$

(b) Prepare the entry at December 31, 2014, to record compensation expense, if any, in 2014.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

(c) Prepare the entry on December 31, 2014, assuming that all 128,000 SARs are exercised.  (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation	Debit	Credit