On May 1, Friendly Company issued 2,000 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. Immediately after issuance, bonds had a fair value of $1,960,000, and warrants had a fair value of $80,000. There were 2,000 bonds and 2,000 warrants outstanding. The warrants were recorded at $80,000 by both Friendly Company and the investor during the holding period. Upon maturity of bonds, each detachable warrant allows its holder (i.e., the investor) to purchase 1 share of Friendly Companys common stock at $10 per share. Friendly Companys common stock par value is $1, and its market value is $60 when the warrants are exercised.

1. Make the journal entry for the issuer when the warrants are exercised.
2. Make the journal entry for the investor when exercising the warrants.