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On September 1, 2017, Sheffield Company sold at 104 (plus accrued interest) 3,840 of its 8%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock
On September 1, 2017, Sheffield Company sold at 104 (plus accrued interest) 3,840 of its 8%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $13 per share. Shortly after issuance, the warrants were quoted on the market for $2 each. No fair value can be determined for the Sheffield Company bonds. Interest is payable on December 1 and June 1. Bond issue costs of $32,700 were incurred.
Prepare in general journal format the entry to record the issuance of the bonds. (Credit ac "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Cash Premium on Bonds Payable 32700 Bonds Payable 3840000 Paid-in Capital-Stock Warrants Bond Interest Expense
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