Question

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On September 1, 2020, Metlock Company sold at 104 (plus accrued interest) 4,080 of its 10%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $14 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. No fair value can be determined for the Metlock Company bonds. Interest is payable on December 1 and June 1. Prepare in general journal format the entry to record the issuance of the bonds. (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 o for the amounts.) Account Titles and Explanation Debit Credit TCash Unamortized Bond Issue C xxl Premium on Bonds Payable TPaid-in Capital-Stock Warr X Bond Conversion Expense

Answer 1

Aniwer . . TRAVEL Citi TROPENE Bond Bond is one of the source of funds raise from the public. There are various types of bonds issued to publis Company issues | bonds on d seedeemable year basit. Company has to make compulsory interest expeduje on the albibanding balance of Boods. Talepest belps company to take benefit of tx Shield GA

Amr.(3) Metlock Company Journal Entry of Bond Sel). as on sept.19, 2020 Particulars Amt (son Cash Ale Dr. 2345200 To Bonds Payable Alc (4080 Bonds x $1000) To them on Bonds Alo To Pelid in Capital - Sback Warrents de - To Interest Payable Al (Being to record sale of bonds on premium) 4080000 138722 24480 102000 Total 14345200 4345200 Working Notes Net proceeds from sale Net Ploceeds from sale of bonds of boots of Roof Conds 1 + 4%+ Inbevest t la face Value / Accrued for 3 orth = [(4080 Boost X 1000) +4% + [64080 Bagds' X rooo) x.10%*$/12 montare] E K 14243200 + 10.000 S 4345200 - :

☺ Premium on Bonds Company has sold bonds of premium to the investors. Boodsave is need on premium as the money received aga last bonds is more than the face value of bonds Premium is calculgher Las follows: Money 4343 200 Received agglast bonds (4080 bonds X $ 1000) + 4% (24480) -: Apoygli qllocupled to Shock Warreats (4080 bands x 2 Detachyble x $3 Markel! stock Warrants Uglye of - Warrant) -- [alse Valte of Bonds (4080 Bonds" x 100) C4080000 - Premium on Bonds 138720 - ③ Amount Allocated to stock Warrants It is given that each bond has carrjed a detachable stock Warrants at a market price of $3 each. i Amount Allocaled : 4080 X_2 stack X $3 Markel $ 24480 to stock warrant Bonds Warrants Pujce . اممممم لدماور ها 2 company has issued bonds on Sept. I. The interest dqbe are Dec. I an. Jynel Therefore 3 months interest is due to pay to investors Poterest on = 4080 Bonts X 10% X 3 months = $ 102000 - Bonls 1 x 1000 in moother