$.104.$ Perez Communications issued $$30$ million of $10\%$ nonconvertible bonds at

The bonds are due on July $31,2044.$

Each $$1,000$ bond was issued with $20$ detachable stock warrants, each of which entitled the bondholder to purchase, for $$60,$ one share of Perez Communications' no par common stock.

Interstate Containers purchased $20\%$ of the bond issue.

On August $1,2024,$ the market value of the common stock was $$58$ per share and the market value of each warrant was $$8.$

In February $2035,$ when Perez common stock had a market price of $$72$ per share and the unamortized discount balance was $$1$ million, Interstate Containers exercised the warrants it held.

Required:

Prepare the journal entries on August $1,2024,$ to record $($a$)$ the issuance of the bonds by Perez and $($b$)$ the investment by Interstate.

Prepare the journal entries for both Perez and Interstate in February $2035,$ to record the exercise of the warrants.