On January 1, 2014, Gottlieb Corporation issued $ 4,000,000 of 10- year, 8 % convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $ 1,000 debenture can be converted into eight shares of Gottlieb Corporation $ 100 par value common stock after December 31, 2015.
E16-7( Issuance of Bonds with Warrants)
Illiad Inc. has decided to raise additional capital by issuing $ 170,000 face value of bonds with a coupon rate of 10 %. 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 $ 136,000, and the value of the warrants in the market is $ 24,000. The bonds sold in the market at issuance for $ 152,000.
E16-12
( Issuance, Exercise, and Termination of Stock Options)
On January 1, 2013, Nichols Corporation granted 10,000 options to key executives. Each option allows the executive to purchase one share of Nichols’ $ 5 par value common stock at a price of $ 20 per share. The options were exercisable within a 2-year period beginning January 1, 2015, if the grantee is still employed by the company at the time of the exercise. On the grant date, Nichols’