Question
ABC Company Issues $5,000,000 of bonds with a stated rate of 8% (5,000 at $1,000 each). To help with the sale, detachable warrants are issues
ABC Company Issues $5,000,000 of bonds with a stated rate of 8% (5,000 at $1,000 each). To help with the sale, detachable warrants are issues at the rate of ten (10) warrants for each $1,000 bond sold. It is estimated that the value of the bonds without the warrants is $4,935,000 and the value of the warrants is $315,000. The bonds with the warrants sold at 101. Using proportional method
1. Prepare the journal entry to record the sale of the bonds with the detachable warrants.
2. Prepare the journal entry to record the sale of the bonds if the warrants were undetachable (use same selling price)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started