Blue Inc. has decided to raise additional capital by issuing
$185,000 face value of bonds with a coupon rate of 10%. In
discussions with investment bankers, it was determined that to help
the sale of the bonds, detachable stock warrants should be issued
at the rate of one warrant for each $100 bond sold. The value of
the bonds without the warrants is considered to be $126,400, and
the value of the warrants in the market is $31,600. The bonds sold
in the market at issuance for $150,000.
(a) What entry should be made at the time of the
issuance of the bonds and warrants? (Credit account
titles are automatically indented when amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the
account titles and enter 0 for the amounts. Round intermediate
calculations to 5 decimal places, e.g. 1.24687 and final answers to
0 decimal places, e.g. 5,125.)
Account Titles and Explanation |
Debit |
Credit |
---|---|---|
enter an account title |
enter a debit amount |
enter a credit amount |
enter an account title |
enter a debit amount |
enter a credit amount |
enter an account title |
enter a debit amount |
enter a credit amount |
enter an account title |
enter a debit amount |
enter a credit amount |
(b1) Prepare the entry if the warrants were
nondetachable. (Credit account titles are automatically
indented when amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Round intermediate calculations to 5
decimal places, e.g. 1.24687 and final answers to 0 decimal places,
e.g. 5,125.)
Account Titles and Explanation |
Debit |
Credit |
---|---|---|
enter an account title |
enter a debit amount |
enter a credit amount |
enter an account title |
enter a debit amount |
enter a credit amount |
enter an account title |
enter a debit amount |
enter a credit amount |
a | ||||
Cash | 150,000 | |||
Discount on Bonds payable | 65000 | |||
Bonds payable | 185000 | |||
Paid in capital-Stock warrants | 30,000 | =150,000/(126400+31600)*31600 | ||
b | ||||
Cash | 150,000 | |||
Discount on Bonds payable | 35000 | |||
Bonds payable |
185,000 |
Blue Inc. has decided to raise additional capital by issuing $185,000 face value of bonds with...
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Exercise 16-07 Illiad Inc. has decided to raise additional capital by issuing $170,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $136,000, and the value of the warrants in the market is $24,000....
* Question 8 Riverbed Inc. has decided to raise additional capital by issuing $177,000 face value of bonds with a coupon rate of 11% In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $123,200, and the value of the warrants in the market is...
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