Exercise B

Bond with detachable warrant	Warrants	Common Stock
Bond Amount 100	Detachable per bond 1	Par Value $100
Par Value $100	Fair Value (prior selling) -	Fair Value $100
Fair Value sale without warrant 102%	Fair Value (post selling) $30	Fair Value $110
Sale at par value $10,000	100%	Additional cash per share $ -

Using the information above, prepare the Journal Entries for the borrower and the investor.

Actions to take:

1. Selling of bond and detachable warrants
2. Exercise of warrant
3. Expiration of warrant