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On August 1, 2024, Perez Communications issued $25 million of 8% nonconvertible bonds at 102. ⚫ 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 $50, 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 $46 per share and the market value of each warrant was $6. In February 2035, when Perez common stock had a market price of $60 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. Answer is complete but not entirely correct. 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). No Event A 1 Cash General Journal Discount on bonds payable Bonds payable Equity - stock warrants Debit 25.50 3.75 X Credit 25.00 3.25 X B 2 Investment in stock warrants 0.75 X Investment in bonds 5.00 Discount on investment in bonds 0.65 X Show less A

On August 1, 2024, Perez Communications issued $25 million of 8% nonconvertible bonds at 102. ⚫ 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 $50, 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 $46 per share and the market value of each warrant was $6. In February 2035, when Perez common stock had a market price of $60 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. Answer is complete but not entirely correct. 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). No Event A 1 Cash General Journal Discount on bonds payable Bonds payable Equity - stock warrants Debit 25.50 3.75 X Credit 25.00 3.25 X B 2 Investment in stock warrants 0.75 X Investment in bonds 5.00 Discount on investment in bonds 0.65 X Show less A

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On August 1, 2024, Perez Communications issued $25 million of 8% nonconvertible bonds at 102. ⚫ 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 $50, 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 $46 per share and the market value of each warrant was $6. In February 2035, when Perez common stock had a market price of $60 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. Answer is complete but not entirely correct. 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). No Event A 1 Cash General Journal Discount on bonds payable Bonds payable Equity - stock warrants Debit 25.50 3.75 X Credit 25.00 3.25 X B 2 Investment in stock warrants 0.75 X Investment in bonds 5.00 Discount on investment in bonds 0.65 X Show less A
Transcribed Image Text:On August 1, 2024, Perez Communications issued $25 million of 8% nonconvertible bonds at 102. ⚫ 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 $50, 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 $46 per share and the market value of each warrant was $6. In February 2035, when Perez common stock had a market price of $60 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. Answer is complete but not entirely correct. 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). No Event A 1 Cash General Journal Discount on bonds payable Bonds payable Equity - stock warrants Debit 25.50 3.75 X Credit 25.00 3.25 X B 2 Investment in stock warrants 0.75 X Investment in bonds 5.00 Discount on investment in bonds 0.65 X Show less A
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