On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Payne's common stock was $35 per share and of the warrants was $2. 2. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for a. $36,560. b. $36,720. c. $37,080. d. $65,000. 3. On May 1, 2014, Payne should record the bonds with a a. discount of $36,000. b. premium of $10,080. c. discount of $18,720. d. premium of $27,000.
On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Payne's common stock was $35 per share and of the warrants was $2. 2. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for a. $36,560. b. $36,720. c. $37,080. d. $65,000. 3. On May 1, 2014, Payne should record the bonds with a a. discount of $36,000. b. premium of $10,080. c. discount of $18,720. d. premium of $27,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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