The journal entry to record issuance of bonds assuming that the company is using proportional method.

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Chapter 14, Problem 14.27BE

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To prepare: The journal entry to record issuance of bonds assuming that the company is using proportional method.

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Anteater Company issued 200 bonds, each with a face amount of $1,000, with detachable stock warrants at 102. Each warrant entitled its holder to acquire two shares of $100 par common stock for $125 per share. Through discussion with investment bankers, it is determined that the bonds would sell for 98 without the warrants. The market value of each warrant is $45. Instructions: A. Record the issuance of the bonds. B. Record the entry necessary assuming half of the warrants are exercised. C. Record the entry necessary assuming the remaining warrants after the exercise in B. above expire before being exercised.

Hoffman Corporation issued $60 million of 8%, 20-year bonds at 105. Each of the 60,000 bonds was issued with 13 detachable stock warrants, each of which entitled the bondholder to purchase, for $26, one share of $1 par common stock. At the time of sale, the market value of the common stock was $31 per share and the market value of each warrant was $5. Prepare the journal entry to record the issuance of the bonds.

Hoffman Corporation issued $80 million of 7%, 10-year bonds at 104. Each of the 80,000 bonds was issued with 11 detachable stock warrants, each of which entitled the bondholder to purchase, for $22, one share of $1 par common stock. At the time of sale, the market value of the common stock was $27 per share and the market value of each warrant was $5. Prepare the journal entry to record the issuance of the bonds. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Event General Journal Debit Credit 1 Cash 83.2 Discount on bonds payable 40.8 X Bonds payable 80.0 O Equity-stock warrants 44.0 X Next > ( Prev 6 of 7