A Company issued 2,000, $100 bonds with the warrants attached for $205,000. Detachable 2-

year warrants to buy one share of common stock were attached. The bonds were quoted at 90

without the warrants. The market price of the warrants without the bonds was $10. What

amount should be allocated to the warrants?

a. $20,000

b. $20,500

c. $24,000

d. $0

Refer back to the prior problem. Assume the warrants are not detachable. What amount, if

any, of the proceeds from the issuance should be accounted for as part of stockholders' equity?

a. $20,000

b. $20,500

c. $24,000

d. $0