Novak Inc. has decided to raise additional capital by issuing $$178,000$ face value of bonds with a coupon rate of $10\%.$ In

discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants

should be issued at the rate of one warrant for each $$100$ bond sold. The value of the bonds without the warrants is

considered to be $$120,800,$ and the value of the warrants in the market is $$30,200.$ The bonds sold in the market at

issuance for $$162,000.$

$($a$)$ What entry should be made at the time of the issuance of the bonds and warrants? $($List debit entry before

credit entry. Credit account titles are automatically indented when amount is entered. Do not indent

manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the

amounts. Round intermediate calculations to $5$ decimal places, e$.$g$.1\mathrm{.}24687$ and final answers to $0$

decimal places, e$.$g$.5,125.)$

Account Titles and Explanation

Debit

Credit

$($b$1)$ Prepare the entry if the warrants were nondetachable. $($List all debit entries before credit entries. Credit

account titles are automatically indented when amount is entered. Do not indent manually. If no

entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. Do not round

intermediate calculations. Round answers to $0$ decimal places, e$.$g$.5,125.)$

Account Titles and Explanation

Debit

Credit