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On January 1st 2022, Griswolds Food Additives, Inc. issued 20,000 $1,000 4% bonds for $22,000,000. Each bond has one detachable warrant to purchase one share of the company's $1 par common stock for $200. The fair value of common stock is $208. Bonds without warrants trade at $945. The fair value of each warrant is $105. On that date, the premium or discount recorded on bond payable is (Rounded final answer to nearest $1,000) The correct answer should be $200,000 discount!

On January 1st 2022, Griswolds Food Additives, Inc. issued 20,000 $1,000 4% bonds for $22,000,000. Each bond has one detachable warrant to purchase one share of the company's $1 par common stock for $200. The fair value of common stock is $208. Bonds without warrants trade at $945. The fair value of each warrant is $105. On that date, the premium or discount recorded on bond payable is (Rounded final answer to nearest $1,000) The correct answer should be $200,000 discount!

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1st 2022, Griswolds Food Additives, Inc. issued 20,000 $1,000 4% bonds for $22,000,000. Each bond has one detachable warrant to purchase one share of the company's $1 par common stock for $200. The fair value of common stock is $208. Bonds without warrants trade at $945. The fair value of each warrant is $105. On that date, the premium or discount recorded on bond payable is (Rounded final answer to nearest $1,000) The correct answer should be $200,000 discount!
Transcribed Image Text:On January 1st 2022, Griswolds Food Additives, Inc. issued 20,000 $1,000 4% bonds for $22,000,000. Each bond has one detachable warrant to purchase one share of the company's $1 par common stock for $200. The fair value of common stock is $208. Bonds without warrants trade at $945. The fair value of each warrant is $105. On that date, the premium or discount recorded on bond payable is (Rounded final answer to nearest $1,000) The correct answer should be $200,000 discount!
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