August 1st entry is as follows: Issued $3 million of 10% nonconvertible bonds at 104. The bonds are de on July 31, 2041.

Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of no par common stock. The market value of the common stock was $58 per share and the market value of stock warrant was $8.

Journal Entry for August 1st:

Debit to Cash for 3,120,000

Debit to Discount on Bonds Payable for $360,000

Credit to Bonds Payable for $3,000,000

Credit to Paid-in-Capital, Stock Warrant for $480,000

(ENTRY ABOVE MARKED AS CORRECT BY PROFESSOR)

Need Adjusting Entry for December 31st regarding this August 1st entry.

The company recognizes accrued interest for the bonds issued on August 1st. The company uses straight method for the bond issued on August 1st. The fair value of the shares is $5,200,000. What is the adjusting entry?