On August 1, 2016, Limbaugh Communications issued $38 million of 9% nonconvertible bonds at 105. The bonds are due on July 31, 2036. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of Limbaugh Communications no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2016, the market value of the common stock was $48 per share and the market value of each warrant was $5.

In February 2027, when Limbaughs common stock had a market price of $65 per share and the unamortized discount balance was $2 million, Interstate Containers exercised the warrants it held.

On August 1, 2016, Limbaugh Communications issued $38 million of 9% nonconvertible bonds at 105, The bonds are due on July 31, 2036. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of Limbaugh Communications' no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2016, the market value of the common stock was $48 per share and the market value of each warrant was $5 In February 2027, when Limbaugh's common stock had a market price of $65 per share and the unamortized discount balance was $2 million, Interstate Containers exercised the warrants it held Required 1. Prepare the journal entries on August 1, 2016, to record (a) the issuance of the bonds by Limbaugh and (b) the investment by Interstate. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions and round to 2 decimal places (i.e., 5,500,000 should be entered as 5.50).) View transaction list Journal entry worksheet 2 Record the issuance of the bonds by Limbaugh Note: Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal