Question

Flint Corporation issued 2,000 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market price of $39.

Use the proportional method to record 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

Answer 1

Journal Entry

No	Account Title and Explanation	Debit	Credit
1	Cash	$2,040,000
	Discount on Bonds Payable	$38,077
	Bonds Payable		$2000,000
	Paid in Capital : Stock Warrants		$78,077

Cash = 2,000 × 1,000 × 102 % = $2,040,000

Discount on Bonds Payable = $2,000,000 - $1,961,923 = $38,077

$2,040,000 ×980 / (980 +39) = $1,961,923