on April 1, 2016. the happy city issued $ 300,000 of 10% bonds at 105. each...
on April 1, 2016. the happy city issued $ 300,000 of 10% bonds at 105. each 1000 bond was sold with 25 detachable stock warrants, each permitting the investor to purchase one share of common stock for $19. on that date the market value of each warrant was 4.
on March 1, 2017, when the happy city's common stock had a market price of $20 per share, 40% of the warrants were exercised.
the company's entry on march 1, 2017 will include a :
A debit cash 57000
B credit paid-in capital -warrants 12000
C credit paid-in capital in excess of par $57000
D debit cash 60000
why the answer is A could you explain to me with the procedure, please
Homework Answers
| Number of stock warrant | 7,500 | =$300000/$1000*25 |
| ( Each $1,000 bond contains 25 warrants ) | ||
| Number of warrants excercised | 3,000 | =7500*40% |
| Exercise price | $ 19 | |
| Cash received on March 1,2017 | $ 57,000 | =3000*19 |
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