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Sarasota Corporation issued 5,400, five year, 3% bonds at 104 on January 1, 2020. Interest is paid annually. Each $1,000 bond carried one detachable warrant
Sarasota Corporation issued 5,400, five year, 3% bonds at 104 on January 1, 2020. Interest is paid annually. Each $1,000 bond carried one detachable warrant allowing the holder to purchase 100 common shares in Sarasota at $10 per share, the price at which Sarasota shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 6%. On June 30, 2020, 1,080 of the bond holders exercised the options to buy the shares. Prepare the journal entries to record these events.
Date Account Titles and Explanation Debit Credit Jan. 1, 2020 Cash Bonds Payable Contributed Surplus - Stock Warrants Jun 30, 2020 Cash Contributed Surplus - Stock Options Common Shares
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