Question
Teal Corp issued $2,000,000, twenty-year, 6 percent bonds for $2,180,000. Each $1,000 bond has one detachable warrant, each of which permits the purchase of one
Teal Corp issued $2,000,000, twenty-year, 6 percent bonds for $2,180,000. Each $1,000 bond has one detachable warrant, each of which permits the purchase of one share of the corporation's common stock for $50. The stock has a par value of $25 per share. Immediately after the sale of the bonds, the corporation's securities had the following market values:
6% bond without warrants 0 .96
Warrants $55
Paid in capital common stock $237,400
What accounts should Teal Corp credit to record the sale of the bonds?
Select one:
Bonds payable 2,000,000 Paid in capital - stock warrants 260,000
Bonds payable 2,000,000 Paid in capital - stock warrants 180,000
Bonds payable 2,000,000 Premium on B/P 72,079 Paid in capital - stock warrants 107,921
Bonds payable 1,960,000 Premium on B/P 40,000 Paid in capital - stock warrants 130,000
Bonds payable 1,920,000 Premium on B/P 72,079 Paid in capital - stock warrants 187,921
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