Randolph Company issued 4,500 of its $ 1,000 par value bonds for $ 1,440, providing total cash

Question:

Randolph Company issued 4,500 of its $ 1,000 bonds for $ 1,440, providing total cash proceeds of $ 6,480,000. There are no bond issue costs. The market price of Randolph’s common shares on the date the bonds were issued was $ 40 per share. The bonds were sold with 90,000 warrants to acquire 90,000 shares of the company’s $ 1 for $ 50 per share. That is, each bond carries 20 warrants. Randolph has existing bonds outstanding that currently trade without warrants at $ 1,160. There are other Randolph warrants outstanding that trade for $ 35 each. Assume that the fair value of the bonds is more reliable than the market value of the warrants.
Required
a. Prepare the journal entry to record issuance of the bonds assuming that the warrants are non detachable.
b. Prepare the journal entry to record the issuance of the bonds assuming that the warrants are detachable using the proportional method.
c. Prepare the journal entry to record the issuance of the bonds assuming that the warrants are detachable using the incremental method.
d. Assuming that the incremental method is used, prepare the journal entry required to record the exercise of all warrants. Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...