For each of the unrelated transactions described below, present the entries required to record each transaction.
1. Grand Corp. issued $20,151,000 par value 11% convertible bonds at 96. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at 95. Expenses of issuing the bonds were $72,500.
2. Hoosier Company issued $20,151,000 par value 11% bonds at 95. One detachable stock warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4.
3. Suppose Sepracor, Inc. called its convertible debt in 2014. Assume the following related to the transaction: The 12%, $10,039,000 par value bonds were converted into 1,003,900 shares of $1 par value common stock on July 1, 2014. On July 1, there was $62,100 of unamortized discount applicable to the bonds, and the company paid an additional $85,100 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.