Novak Corporation issued 3,600, five year, 3% bonds at 104 on January 1, 2020. Interest is paid annually. Each $1,000 bond carried one detachable warrant allowing the holder to purchase 100 common shares in Novak at $12 per share, the price at which Novak shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 5%. On June 30, 2020, 720 of the bond holders exercised the options to buy the shares.

Prepare the journal entries to record these events.

Novak Corporation issued 3,600, five year, 3% bonds at 104 on January 1, 2020. Interest is paid annually. Each $1,000 bond carried one detachable warrant allowing the holder to purchase 100 common shares in Novak at $12 per share, the price at which Novak shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 5%. On June 30, 2020, 720 of the bond holders exercised the options to buy the shares. Prepare the journal entries to record these events. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2020 TCash 3744000 2 T Bonds Payable 3419809 I Contributed Surplus - 324191 Jun. 30, 20207Cash 2500 2 TContributed Surplus - Stoc 324191 T Common Shares 326691