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Fort Company issued 6,100 of its $1,000 par value bonds for $1,540, providing total cash proceeds of $9,394,000. The market price of Fort's common shares on the date that it issued the bonds was $26 per share. It sold the bonds with 305,000 detachable warrants to acquire 305,000 shares of the company's $2 par value common stock for $26 per share. That is, each bond carried 50 warrants x 6,100 bonds = 305,000 shares. Fort had existing bonds outstanding that trade without warrants at $1,300. Prepare the journal entry to record the issuance of the bonds assuming that the incremental method is used and the market value of the warrants is not reasonably determinable. (Record debits first, then credits. Exclude explanations from any journal entries.)

Fort Company issued 6,100 of its $1,000 par value bonds for $1,540, providing total cash proceeds of $9,394,000. The market price of Fort's common shares on the date that it issued the bonds was $26 per share. It sold the bonds with 305,000 detachable warrants to acquire 305,000 shares of the company's $2 par value common stock for $26 per share. That is, each bond carried 50 warrants x 6,100 bonds = 305,000 shares. Fort had existing bonds outstanding that trade without warrants at $1,300. Prepare the journal entry to record the issuance of the bonds assuming that the incremental method is used and the market value of the warrants is not reasonably determinable. (Record debits first, then credits. Exclude explanations from any journal entries.)

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 3C
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Fort Company issued 6,100 of its $1,000 par value bonds for $1,540, providing total cash proceeds of $9,394,000. The market price of Fort's common shares on the date that it issued the bonds was $26 per share. It sold the bonds with 305,000 detachable warrants to acquire 305,000 shares of the company's $2 par value common stock for $26 per share. That is, each bond carried 50 warrants x 6,100 bonds 305,000 shares. Fort had existing bonds outstanding that trade without warrants at $1,300. Prepare the journal entry to record the issuance of the bonds assuming that the incremental method is used and the market value of the warrants is not reasonably determinable. (Record debits first, then credits. Exclude explanations from any journal entries.) Account Cash Additional Paid-in Capital-Stock Warrants Bonds Payable Premium on Bonds Payable Date of Issue 9394000
Transcribed Image Text:Fort Company issued 6,100 of its $1,000 par value bonds for $1,540, providing total cash proceeds of $9,394,000. The market price of Fort's common shares on the date that it issued the bonds was $26 per share. It sold the bonds with 305,000 detachable warrants to acquire 305,000 shares of the company's $2 par value common stock for $26 per share. That is, each bond carried 50 warrants x 6,100 bonds 305,000 shares. Fort had existing bonds outstanding that trade without warrants at $1,300. Prepare the journal entry to record the issuance of the bonds assuming that the incremental method is used and the market value of the warrants is not reasonably determinable. (Record debits first, then credits. Exclude explanations from any journal entries.) Account Cash Additional Paid-in Capital-Stock Warrants Bonds Payable Premium on Bonds Payable Date of Issue 9394000
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