Homework Answers
Answer:
| Part 1a | |||
| Date | Accounts title | Debit($) | Credit($) |
| in Million | in Million | ||
| Aug-01 | Cash ($45m*102%) | 45.90 | |
| Discount on Bond Payable (Plug in) | 7.20 | ||
| Bond Payable (Face Value) | 45.00 | ||
| Equity Stock Warrant ($9*20 Warrants*(450,00,000/$1000)) | 8.10 | ||
| (To record issuance of bond) | |||
| Part 1b | |||
| Aug-01 | Investment in Stock warrants ($8.10m*20%) | 1.62 | |
| Investment in Bods (45m*20%) | 9.00 | ||
| Discount on Bonds (Plug in) | 1.44 | ||
| Cash ($45m*102%*20%) | 9.18 | ||
| (To record invetment in bonds and warrants) | |||
| Part 2 | Limbaugh - Issuer | ||
| Feb-29 | Cash (45,000 Bonds*20 warrants*$40)*20% | 7.20 | |
| Equity Stock Warrants ($8.10m*20%) | 1.62 | ||
| Common Stock (Plug in) | 8.82 | ||
| (To record warrant exercise) | |||
| Interstate-Investor | |||
| Feb-29 | Investment in Common Stock | 8.82 | |
| Investment in Stock warrants ($8.10m*20%) | 1.62 | ||
| Cash (45,000 Bonds*20 warrants*$40)*20% | 7.20 | ||
| (To record warrant exercise) | |||
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