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a.

The Dally Company offered warrants to buy $1 par common stock at $10 with its issuance of 100 bonds (face value: $100 per bond). Four warrants were issued with every bond. Sale price of the bonds and detachable warrants was $12,000. After issuance, the bonds (without warrants) are quoted at 92 and the warrants are quoted at $2 each.

The journal entry to record the issuance of the bonds and warrants includes:

a. A credit to Premium on Bonds for $800

b. A credit to Paid-In Capital -SW for $255

c. A credit to Premium on Bonds for $1,040

d. A debit to Bond Discount for $960

e. A credit to Paid-in Capital SW for $800

b.

The Dally Company offered warrants to buy $1 par common stock at $10 with its issuance of 100 bonds (face value: $100 per bond). Four warrants were issued with every bond. Sale price of the bonds and detachable warrants was $12,000. The market value of each bond (without warrants) was 103 and the market value of the warrants was unknown.

The journal entry to record the issuance of the bonds and warrants includes:

a. A credit to Paid-In Capital-SW for $1,700

b. A credit to Premium on Bonds for $360

c. A credit to Premium on Bonds for $1,040

d. A credit to Paid-In Capital-SW for $300

e. A credit to Paid-In Capital-SW for $700