Please assist in completing the correct journal entries for the following transa
ID: 2455333 • Letter: P
Question
Please assist in completing the correct journal entries for the following transactions:
DOUBLECLICK – RAISE CAPITAL TRANSACTIONS
Equity
Debt
On February 20, 1998 Doubleclick went public selling 4,025,000 shares at a price of $17 per share. The IPO resulted in approximately $62.5 million net proceeds for the company. At the end of its first trading day, DCLK stock closed at $27 per share. Par value per share = $0.001.
Dr. Cash 62,500,000
Cr. Common Stock 4,025
Cr. Additional Paid-In Capital 62,495,975
Proceeds are recorded net of issuance costs
As planned, in December 1998, the company completed the additional public offering of 2,875,000 shares of DoubleClick common stock. Proceeds from this additional offering totaled approximately $93.7 million net of offering costs of $700,000. Par value per share = $0.001.
On February 24, 2000, pursuant to an underwriting agreement dated February 17, 2000, DoubleClick completed a public offering of 7,500,000 shares of its common stock, of which DoubleClick sold 5,733,411 shares and certain shareholders sold 1,766,589 shares. DoubleClick’s net proceeds were approximately $502.9 million, after various expenses. Par value per share = $0.001.
On March 17, 1999, when DoubleClick was trading at $72.90, the company issued and sold in a private offering of $250 million aggregate principal amount of 4.75% convertible subordinated notes that matured on March 15, 2006. DoubleClick incurred approximately $5.3 million in issuance costs, which are included in other assets on the consolidated balance sheet. These costs were being amortized over the term of the notes.
Dr. Cash 250,000,000
Cr. Bonds Payable 250,000,000
Dr. Bond Issuance Costs 5,300,000
Cr. Cash 5,300,000
DOUBLECLICK PERIODIC TRANSACTIONS
Equity
Debt
Rather than pay a cash dividend, on March 11, 1999, DoubleClick announced that is Board of directors approved a 2-for-1 stock split in the form of a stock dividend for common shareholders. At the time of the announcement the stock of DoubleClick was trading at $65.50 and there were 9,783,943 shares outstanding.
New shares issued = 19,567,886
(=2 x 9,783,943)
Common stock before = 9,783,943 x 0.001 = 9,784
Required common stock adjustment = 9,784
Stock split effected in the form of a dividend -
Dr. Retained Earnings 9,784
Cr. Common Stock 9,784
DoubleClick effected a two-for-one stock split in the form of 100 percent stock dividends (i.e. par value per share was not changed). As of December 31, 1999, after the split, there were 112,453,892 common shares outstanding.
Semi-annual interest payment on September 15, 1999. Principal = $250 million; Interest rate = 4.75%.
Dr. Interest Expense 5,937,500
Cr. Cash 5,937,500
5,937,500 = (4.75% x 250,000,000 x ½)
Dr. Bond Issue Expense 378,571
Cr. Bond Issuance Costs 378,571
378,571 =5,300,000/7 x ½
Accrual of interest for September 16, 1999 – December 31, 1999 (semi-annual payment not due until May 15, 2000)
DOUBLECLICK RETIREMENT OF CLAIMS TRANSACTIONS
Equity
Debt
In the third quarter of 2001, DoubleClick repurchased $20.3 million of its outstanding 4.75% Convertible Subordinated Notes for approximately $13.6 million in cash.
Dr. Bonds Payable 20,300,000
Cr. Gain Extinguishment 6,700,000
Cr. Cash 13,600,000
In the fourth quarter of 2001, DoubleClick repurchased $10.0 million of its outstanding 4.74% Convertible Subordinated Notes for approximately $8.3 million in cash.
Following the September 11, 2001 terrorist attack, DoubleClick purchased 765,000 shares of its common stock at an average price of $5.84 per share.
Dr. Treasury Stock 4,467,600
Cr. Cash 4,467,600
Doubleclick re-issued the 765,000 shares it repurchased for $7 per share.
DOUBLECLICK – RAISE CAPITAL TRANSACTIONS
Equity
Debt
On February 20, 1998 Doubleclick went public selling 4,025,000 shares at a price of $17 per share. The IPO resulted in approximately $62.5 million net proceeds for the company. At the end of its first trading day, DCLK stock closed at $27 per share. Par value per share = $0.001.
Dr. Cash 62,500,000
Cr. Common Stock 4,025
Cr. Additional Paid-In Capital 62,495,975
Proceeds are recorded net of issuance costs
As planned, in December 1998, the company completed the additional public offering of 2,875,000 shares of DoubleClick common stock. Proceeds from this additional offering totaled approximately $93.7 million net of offering costs of $700,000. Par value per share = $0.001.
On February 24, 2000, pursuant to an underwriting agreement dated February 17, 2000, DoubleClick completed a public offering of 7,500,000 shares of its common stock, of which DoubleClick sold 5,733,411 shares and certain shareholders sold 1,766,589 shares. DoubleClick’s net proceeds were approximately $502.9 million, after various expenses. Par value per share = $0.001.
On March 17, 1999, when DoubleClick was trading at $72.90, the company issued and sold in a private offering of $250 million aggregate principal amount of 4.75% convertible subordinated notes that matured on March 15, 2006. DoubleClick incurred approximately $5.3 million in issuance costs, which are included in other assets on the consolidated balance sheet. These costs were being amortized over the term of the notes.
Dr. Cash 250,000,000
Cr. Bonds Payable 250,000,000
Dr. Bond Issuance Costs 5,300,000
Cr. Cash 5,300,000
Explanation / Answer
Journal entries
Interest expense = ($250000000*4.75%*3.5)/12
= $3463542
S.No. Particulars Debit Credit Raise capital transactions 1. Cash A/c Dr $62500000 To common stock A/c $4025 To Additional paid in capital $62495975 2 Cash A/c Dr. $93700000 To comoon stock $2875 To additional paid in capital $93697125 3 Cash A/c Dr. $502900000 To common stock $7500 To additional paid in capital $502892500 4 cash A/c Dr. $250000000 To Bonds payable $250000000 Bond issuance A/c Dr. $5300000 To cash A/c $5300000 Periodical transactions 1. Retained earnings A/c Dr. $9784 To common stock A/c $9784 2 Stock to be issued = 112453892*2 = 224907784 Common stock before = 112453892*0001 = 112454 Required common stock adjustment = 112454 Retaines earnings A/c Dr. $112454 To common stock $112454 3 Interest expenses A/c Dr. $5937500 To Cash A/c $5937500 4 Bond issues expenses A/c Dr. $378571 To Bond issuance cost $378571 5.Interest expense = ($250000000*4.75%*3.5)/12
= $3463542
Interest Expense A/c Dr. $3463542 To Interest accrued but not due $3463542 Retirement of claims transaction 1. Bonds Payable A/c Dr. $20300000 To gain extinguishment $6700000 To cash $13600000 2. Bond payable A/c Dr. $10000000 To gain extinguishment $17000000 To cash A/c $83000000 3. Treasury stock A/c dr. $4467600 To cash A/c $4467600 4 Cash A/ Dr. $5355000 To treasury stock $4467600 To additional paid in capital $887400