29 Jun Question 1) On March 1, 2010, Rui
Question
1) On March 1, 2010, Ruiz Corporation issued $800,000 of 8% nonconvertible bonds at 104, which are due on February 28, 2030. In addition, each $1,000 bond was issued with 25 detachable stock warrants, each of which entitled the bondholder to purchase for $50 one share of Ruiz common stock, par value $25. The bonds without the warrants would normally sell at 95. On March 1, 2010, the fair market value of Ruiz’s common stock was $40 per share and the fair market value of the warrants was $2.00. What amount should Ruiz record on March 1, 2010 as paid-in capital from stock warrants? I know that the correct answer to this problem is $41,600 In order to follow up on this question, I am trying to figure out what would be the correct complete journal entry for the answer to this question (Paid-In-Capital for question #1. Can you also provide an explanation of how you arrived at this correct answer for the Journal Entry?
2) On January 1, 2010, Korsak, Inc. established a stock appreciation rights plan for its executives. It entitled them to receive cash at any time during the next 4 years for the difference between the market price of its common stock and a pre-established price of $20 on 60,000 SARs. Current market prices of the stock are as follows: January 1, 2010 $35 per share December 31, 2010 38 per share December 31, 2011 30 per share December 31, 2012 33 per share Compensation expense relating to the plan is to be recorded over a 4-year period beginning January 1, 2010. What amount of compensation expense should Korsak recognize for the year ended December 31, 2011? I already know that the correct compensation expense for this problem is $30,000. Can you provide me with this correct journal entry for the compensation expense and the other credit entry that should accompany it?
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