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Next, record the entry for issuance of the bonds. Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1. Date Account Name Jan. 1, Year 1 Cash Bonds Payable Date Paid-in Capital-Stock Warrants Premium on Bonds Payable To record bond issuance Jan. 2, Year 1 Cash Check Account Name Paid-in Capital-Stock Warrants Common Stock Paid-in Capital in Excess of Par-Common Stock To record conversion of warrants Dr. Cr. 954,000 0 ✓ 0 900,000 0 3,600 x 0 54,000 x Dr. 1,080,000 Cr. v 53,000 0 x 0 900,000 v 0 180,000 x Recording Entries for Bonds with Detachable Warrants On January 1 of Year 1, Friday Corporation issued $900,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Total Amount Proportion of Total Bonds Warrants 918,000 98% 18,000 936,000 100% Next, record the entry for issuance of the bonds. •Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.

Next, record the entry for issuance of the bonds. Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1. Date Account Name Jan. 1, Year 1 Cash Bonds Payable Date Paid-in Capital-Stock Warrants Premium on Bonds Payable To record bond issuance Jan. 2, Year 1 Cash Check Account Name Paid-in Capital-Stock Warrants Common Stock Paid-in Capital in Excess of Par-Common Stock To record conversion of warrants Dr. Cr. 954,000 0 ✓ 0 900,000 0 3,600 x 0 54,000 x Dr. 1,080,000 Cr. v 53,000 0 x 0 900,000 v 0 180,000 x Recording Entries for Bonds with Detachable Warrants On January 1 of Year 1, Friday Corporation issued $900,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Total Amount Proportion of Total Bonds Warrants 918,000 98% 18,000 936,000 100% Next, record the entry for issuance of the bonds. •Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.

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 9P
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Next, record the entry for issuance of the bonds. Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1. Date Account Name Jan. 1, Year 1 Cash Bonds Payable Date Paid-in Capital-Stock Warrants Premium on Bonds Payable To record bond issuance Jan. 2, Year 1 Cash Check Account Name Paid-in Capital-Stock Warrants Common Stock Paid-in Capital in Excess of Par-Common Stock To record conversion of warrants Dr. Cr. 954,000 0 ✓ 0 900,000 0 3,600 x 0 54,000 x Dr. 1,080,000 Cr. v 53,000 0 x 0 900,000 v 0 180,000 x
Transcribed Image Text:Next, record the entry for issuance of the bonds. Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1. Date Account Name Jan. 1, Year 1 Cash Bonds Payable Date Paid-in Capital-Stock Warrants Premium on Bonds Payable To record bond issuance Jan. 2, Year 1 Cash Check Account Name Paid-in Capital-Stock Warrants Common Stock Paid-in Capital in Excess of Par-Common Stock To record conversion of warrants Dr. Cr. 954,000 0 ✓ 0 900,000 0 3,600 x 0 54,000 x Dr. 1,080,000 Cr. v 53,000 0 x 0 900,000 v 0 180,000 x
Recording Entries for Bonds with Detachable Warrants On January 1 of Year 1, Friday Corporation issued $900,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Total Amount Proportion of Total Bonds Warrants 918,000 98% 18,000 936,000 100% Next, record the entry for issuance of the bonds. •Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.
Transcribed Image Text:Recording Entries for Bonds with Detachable Warrants On January 1 of Year 1, Friday Corporation issued $900,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Total Amount Proportion of Total Bonds Warrants 918,000 98% 18,000 936,000 100% Next, record the entry for issuance of the bonds. •Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.
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