Question

0.46/1 Question 5 View Policies Show Attempt History Current Attempt in Progress The stockholders' equity section of Metlock Inc. at the beginning of the current year appears below. Common stock, $10 par value, authorized 1,097,000 shares, 281,000 shares issued and outstanding $2,810,000 Paid-in capital in excess of par-common stock 554,000 Retained earnings 556,000 During the current year, the following transactions occurred. 1. The company issued to the stockholders 92,000 rights. Ten rights are needed to buy one share of stock at $30. The rights were void after 30 days. The market price of the stock at this time was $32 per share. 2. The company sold to the public a $217,000, 10% bond issue at 103. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $28 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $7. 3. All but 4,600 of the rights issued in (1) were exercised in 30 days. 4. At the end of the year, 80% of the warrants in (2) had been exercised, and the remaining were outstanding and in good standing. 5. During the current year, the company granted stock options for 9,800 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $28. The options were to expire at year-end and were considered compensation for the current year. All but 980 shares related to the stock-option plan were exercised by year-end. The expiration resulted because one of the executives failed to fulfill an obligation related to the employment contract. 6.

Answer 1

No.	Account titles and explanation	Debit	Credit
2	Cash	223510
	Discount on Bonds payable	8680
	Bonds payable		217000
	Paid-in capital- Stock warrants		15190
3	Cash	262200
	Common stock		87400
	Paid-in capital in Excess of par – Common Stock		174800
4	Paid-in capital- Stock warrants	12152
	Cash	48608
	Common stock		15190
	Paid-in capital in Excess of par – Common Stock		45570