On January 1, 2019,IT Corporation issued $20 million of nonconvertible bonds at 105. The bonds have a 4% coupon rate and mature in 10 years. Each $1,000 bond was issued with 15 detachable stock warrants, each of which entitled the holder to purchase one share of IT's no-par common stock for $25. Immediately after issuance, the separate market value of the warrants was $5.

a. Prepare the journal entry for IT to record the issuance of these bonds.

b. Calculate the effective interest rate for the bond component (only) of this financial instrument. (Again, you know PV, Pmt, FV and N; you can solve for I). You can round this interest rate to 2 decimal places.

c. Using the effective rate from b., prepare amortization table that covers the first four coupon payments on this bond.

d. On January 1, 2021, assume that holders of 50,000 of the stock warrants elect to exercise these options and buy Legion common stock. Prepare the journal entry for this transaction.