On July 1, 2020 Salem Corporation issued $3 million of 12% bonds payable in 10 years. Each bond is $10,000. The bonds pay interest semiannually. Each bond includes detachable warrants giving the bondholder the right to purchase for $30, one share of $1 par value common stock at any time during the next 10 years. The company sold the $3 million dollar bonds at 101%. Shortly after the bond issuance, the warrants were selling for $5 apiece.

Required:

1. Prepare journal to record the issuance of the bonds.

2. Prepare a journal entry if half of the warrants are exercised.