Question

Practice Problem 16-1 (Part Level Submission) On January 1 2016 Riverbed Company issued 10-year si 04,000 face value, 6% bonds at par (interest payable annually on January 1 Each S1,100 bond is convertible into 32 shares of Riverbed $2 par value common stock. The company has had 11,000 shares of common stock (and no preferred stock) outstanding throughout its I None of the bonds have been converted as of the end of 2017, Riverbed also has adopted a stock-option plan that granted options to key executives to purchase 6,600 shares of the company’s common employee of the company (the service period is 2 years). The options expired 6 years from the date of grant. The option price was set at $5, and the fair value option- pricing model determines the total compensation expense to be $23,000. All of the options were exercised during the year 2018: 3,300 on January 3 when the market price was $7, and 1,100 on May 1 when the market price was $8 a share. (Ignore all tax effects.) stock. The options were granted on January 2, 2016, and were exercisable 2 years after the date of grant if the grantee was still an (a) Your answer is correct. Prepare the journal entry Riverbed would have made on January 1, 2016, to record the issuance of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manualy. If no entry is required, select “No Entry” for the account titiles and enter 0 for the amounts.) Debit Credit Account Tities and Explanation 104 104000 Bonds Payable



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