Question

offman Corporation issued $60 million of 5%, 20-year bonds at 102. Each of the 60,000 bonds was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $20, one share of $1 par common stock. At the time of sale, the market value of the common stock was $25 per share and the market value of each warrant was $5. Prepare the journal entry to record the issuance of the bonds. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

• Record the issuance of the bonds.

Note: Enter debits before credits.

	Event General Journal Debit Credit 1

Answer 1

Cash (60,000,000*102%)	61,200,000
Discount on bonds payable	1, 800,000
Bonds payable		60,000,000
Equity stock warrants outstanding (60,000*10*5)		3,000,000

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