On August 1, 2021, Limbaugh Communications issued $25 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2041. Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Limbaugh Communications no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2021, the market value of the common stock was $58 per share and the market value of each warrant was $8. In February 2032, when Limbaughs common stock had a market price of $73 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, 2021, 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 2032, to record the exercise of the warrants.

Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries on August 1, 2021, 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)). No Event General Journal Debit Credit 1 1 Cash 26.00 5.00 Discount on bonds payable Bonds payable Equity - stock warrants 25.00 6.00 2 2 Investment in stock warrants 1.20 Investment in bonds 5.00 1.00 Discount on investment in bonds Cash 5.20 X Answer is not complete. 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 2032, 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).) No Event General Journal Debit Credit 1 1 Cash 7.50 X 1.20 Equity - stock warrants Common stock 8.70 2 2 Investment in common stock Investment in stock warrants 1.20 Cash