On August 1, 2018, Limbaugh Communications issued $22 million of 11% nonconvertible bonds at 105. The bonds are due on July 31, 2038. Each $1,000 bond was issued with 40 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 2018, the market value of the common stock was $48 per share and the market value of each warrant was $10. In February 2029, when Limbaugh's' common stock had a market price of $62 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, 2018, to record (a) the issuance of the bonds by Limbaugh and (b) the investment by Interstate. 2. Prepare the journal entries for both Limbaugh and Interstate in February 2029, to record the exercise of the warrants Complete this question by entering your answers in the tabs below. Required 2 Required 1 Prepare the journal entries on August 1, 2018, 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)). Chec Prepare the journal entries on August 1, 2018, 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 ans in millions and round to 2 decimal places (i.e., 5,500,000 should be entered as 5.50)). View transaction list View journal entry worksheet No Event General Journal Debit Credit Cash 1 Discount on bonds payable Bonds payable Equity-stock warrants 2 Investment in stock warrants Investment in bonds Discount on bond investment Cash Required 2 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries for both Limbaugh and Interstate in February 2029, to record the exercise of the warrants. (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 journal entry worksheet View transaction list No Event General Journal Debit Credit Cash 1 1 Equity-stock warrants Common stock Investment in common stock 2 2 Required 1
