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On January 1, Costko Corporation issued $120,000 of 6%, 5-year nonconvertible bonds with nondetachable stock purchase warrants. Each $1,000 bond carried 10 warrants, each of which was for one share of Costko common stock, par value $1, at a specified option price of $40 per share. The bonds (including the warrants) sold at 102. No bond price without warrants was available. Required a. Provide the entry at the date of issuance of the bonds. b. Provide the entry at the date of issuance of the bonds assuming instead that the warrants are detachable. Immediately after the date of issuance, the detachable stock purchase warrants were selling at $5 each. Ref. a. b. Cash Account Premium on Bonds Payable Bonds Payable To record issuance of bonds with nondetachable warrants Cash Paid-in Capital-Stock Warrants Bonds Payable Premium on Bonds Payable To record issuance of bonds with detachable warrants V V V Dr. 122,400 0 0 122,400 6,000 0 0 Cr. 0✓ 2,400✔ 120,000 ✓ 0✔ 0x 120,000✔ 0x

On January 1, Costko Corporation issued $120,000 of 6%, 5-year nonconvertible bonds with nondetachable stock purchase warrants. Each $1,000 bond carried 10 warrants, each of which was for one share of Costko common stock, par value $1, at a specified option price of $40 per share. The bonds (including the warrants) sold at 102. No bond price without warrants was available. Required a. Provide the entry at the date of issuance of the bonds. b. Provide the entry at the date of issuance of the bonds assuming instead that the warrants are detachable. Immediately after the date of issuance, the detachable stock purchase warrants were selling at $5 each. Ref. a. b. Cash Account Premium on Bonds Payable Bonds Payable To record issuance of bonds with nondetachable warrants Cash Paid-in Capital-Stock Warrants Bonds Payable Premium on Bonds Payable To record issuance of bonds with detachable warrants V V V Dr. 122,400 0 0 122,400 6,000 0 0 Cr. 0✓ 2,400✔ 120,000 ✓ 0✔ 0x 120,000✔ 0x

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 January 1, Costko Corporation issued $120,000 of 6%, 5 -year nonconvertible bonds with nondetachable stock purchase warrants. Each $1,000 bond carried 10 warrants, each of which was for one share of Costko common stock, par value $1, at a specified option price of $40 per share. The bonds (including the warrants) sold at 102. No bond price without warrants was available. Required a. Provide the entry at the date of issuance of the bonds. b. Provide the entry at the date of issuance of the bonds assuming instead that the warrants are detachable. Immediately after the date of issuance, the detachable stock purchase warrants were selling at $5 each. Ref. a. b. Cash Account Premium on Bonds Payable Bonds Payable To record issuance of bonds with nondetachable warrants Cash Paid-in Capital-Stock Warrants Bonds Payable Premium on Bonds Payable To record issuance of bonds with detachable warrants Dr. 122,400 0 0 122,400 6,000 0 0 Cr. 0 2,400 120,000 0 0x 120,000 0x
Transcribed Image Text:On January 1, Costko Corporation issued $120,000 of 6%, 5 -year nonconvertible bonds with nondetachable stock purchase warrants. Each $1,000 bond carried 10 warrants, each of which was for one share of Costko common stock, par value $1, at a specified option price of $40 per share. The bonds (including the warrants) sold at 102. No bond price without warrants was available. Required a. Provide the entry at the date of issuance of the bonds. b. Provide the entry at the date of issuance of the bonds assuming instead that the warrants are detachable. Immediately after the date of issuance, the detachable stock purchase warrants were selling at $5 each. Ref. a. b. Cash Account Premium on Bonds Payable Bonds Payable To record issuance of bonds with nondetachable warrants Cash Paid-in Capital-Stock Warrants Bonds Payable Premium on Bonds Payable To record issuance of bonds with detachable warrants Dr. 122,400 0 0 122,400 6,000 0 0 Cr. 0 2,400 120,000 0 0x 120,000 0x
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