Journal entries for stock warrants. On December 7, 2002, Altus Pharmaceuticals issued shares of convertible preferred stock and warrants to purchase additional shares of preferred stock for an aggregate issue price of $46,180,000 in a private placement of securities. Investment bankers estimated the fair value of the warrants on this date to be $2,730,000. The Company therefore allocated $43,450,000 to the preferred stock and $2,730,000 to the warrants. Between the issue date and January 15, 2007, dividends of $19,083,000 accrued on the preferred stock but remain unpaid. The preferred stock carries cumulative dividends rights. Because of a deficit in Retained Earnings, the Company debited the dividends to Additional Paid-In Capital each year and credited Convertible Preferred Stock. On January 15, 2007, Altus Pharmaceuticals made its initial public offering of common stock. Holders of the preferred stock converted their shares into 5,269,705 shares of $.01 par value common stock. The warrants to purchase preferred stock became warrants to purchase common stock. Give the journal entry on December 7, 2002, to issue the preferred stock and warrants and the entry on January 15, 2007, to convert the preferred stock to common stock. Use the carrying value method to record the conversion. The warrants remain outstanding.