[45] During its current fiscal year, ING Co. issued bonds with a face amount of $1 million for 104. One detachable stock warrant was attached to each of the $1,000 bonds, and each warrant permits the bearer to purchase 10 shares of ING's common stock at $18 per share. The market price of the stock is currently $22 per share. Each bond has a fair value of $965 without a warrant, and each warrant trades for $40. The amount of the bond proceeds allocated to equity is approximately A. $75,000 B. $40,000 C. $43,109 D. $41,393
[45] During its current fiscal year, ING Co. issued bonds with a face amount of $1 million for 104. One detachable stock warrant was attached to each of the $1,000 bonds, and each warrant permits the bearer to purchase 10 shares of ING's common stock at $18 per share. The market price of the stock is currently $22 per share. Each bond has a fair value of $965 without a warrant, and each warrant trades for $40. The amount of the bond proceeds allocated to equity is approximately A. $75,000 B. $40,000 C. $43,109 D. $41,393
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![[45) During its current fiscal year, ING Co. issued bonds with a face amount of $1 million for 104. One
detachable stock warrant was attached to each of the $1,000 bonds, and each warrant permits the
bearer to purchase 10 shares of ING's common stock at $18 per share. The market price of the stock is
currently $22 per share. Each bond has a fair value of $965 without a warrant, and each warrant
trades for $40. The amount of the bond proceeds allocated to equity is approximately
A. $75,000
B. $40,000
C. $43,109
D. $41,393
[46) Piper Company issued $500,000 of 12%, $1,000 face amount bonds with one detachable stock
warrant per bond. A credit of $10,000 was made to paid-in capital-stock warrants. Each warrant
granted an option to buy one share of $60 par value common stock for $80 per share. If one-half of
these warrants are exercised when the market price is $110 per share, the journal entry to record the
transaction should include a
A. Credit to additional paid-in capital for $20,000.
B. Credit to common stock at par for $30,000.
C. Credit to paid-in capital-stock warrants for $5,000.
D. Credit to additional paid-in capital for $10,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc18f0fee-109f-4c35-b867-220335da0701%2F86af4693-7b5c-44f9-a513-e3f37ee7a3aa%2Fn8490tf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[45) During its current fiscal year, ING Co. issued bonds with a face amount of $1 million for 104. One
detachable stock warrant was attached to each of the $1,000 bonds, and each warrant permits the
bearer to purchase 10 shares of ING's common stock at $18 per share. The market price of the stock is
currently $22 per share. Each bond has a fair value of $965 without a warrant, and each warrant
trades for $40. The amount of the bond proceeds allocated to equity is approximately
A. $75,000
B. $40,000
C. $43,109
D. $41,393
[46) Piper Company issued $500,000 of 12%, $1,000 face amount bonds with one detachable stock
warrant per bond. A credit of $10,000 was made to paid-in capital-stock warrants. Each warrant
granted an option to buy one share of $60 par value common stock for $80 per share. If one-half of
these warrants are exercised when the market price is $110 per share, the journal entry to record the
transaction should include a
A. Credit to additional paid-in capital for $20,000.
B. Credit to common stock at par for $30,000.
C. Credit to paid-in capital-stock warrants for $5,000.
D. Credit to additional paid-in capital for $10,000.
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