On August 1, 2024, Perez Communications issued $25 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2044. Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Perez Communications' no par common stock. • Interstate Containers purchased 20% of the bond issue. . On August 1, 2024, the market value of the common stock was $58 per share and the market value of each warrant was $8. In February 2035, when Perez common stock had a market price of $73 per share and the unamortized discount balance was $2 million, Interstate Containers exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate. 2. Prepare the journal entries for both Perez and Interstate in February 2035, to record the exercise of the warrants. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate. 1 for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in
On August 1, 2024, Perez Communications issued $25 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2044. Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Perez Communications' no par common stock. • Interstate Containers purchased 20% of the bond issue. . On August 1, 2024, the market value of the common stock was $58 per share and the market value of each warrant was $8. In February 2035, when Perez common stock had a market price of $73 per share and the unamortized discount balance was $2 million, Interstate Containers exercised the warrants it held. Required: 1. Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate. 2. Prepare the journal entries for both Perez and Interstate in February 2035, to record the exercise of the warrants. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate. 1 for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A 88.
Transcribed Image Text:On August 1, 2024, Perez Communications issued $25 million of 10% nonconvertible bonds at 104.
The bonds are due on July 31, 2044.
• Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitled the bondholder to purchase, for $60,
one share of Perez Communications' no par common stock.
Interstate Containers purchased 20% of the bond issue.
. On August 1, 2024, the market value of the common stock was $58 per share and the market value of each warrant was $8.
In February 2035, when Perez common stock had a market price of $73 per share and the unamortized discount balance was $2
million, Interstate Containers exercised the warrants it held.
Required:
1. Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate.
2. Prepare the journal entries for both Perez and Interstate in February 2035, to record the exercise of the warrants.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare the journal entries on August 1, 2024, to record (a) the issuance of the bonds by Perez and (b) the investment by Interstate.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in
millions and round to 2 decimal places (i.e., 5,500,000 should be entered as 5,50).
View transaction list
Journal entry worksheet
A
8
Record the issuance of the bonds by Perez.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education