On May 1, 2021, Sunland Company issued $1430000 of 7% bonds at 102, which are due on April 30, 2031. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Sunland’s common stock, $15 par value, were attached to each $1000 bond. The bonds without the warrants would sell at 96. On May 1, 2021, the fair value of Sunland’s common stock was $35 per share and of the warrants was $2. On May 1, 2021, Concord should record the bonds with a premium of $42 900 discount of $14 300 discount of $57 200 discount of $29 744.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On May 1, 2021, Sunland Company issued $1430000 of 7% bonds at 102, which are due on April 30, 2031. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Sunland’s common stock, $15 par value, were attached to each $1000 bond. The bonds without the warrants would sell at 96. On May 1, 2021, the fair value of Sunland’s common stock was $35 per share and of the warrants was $2.

On May 1, 2021, Concord should record the bonds with a

  1. premium of $42 900
  2. discount of $14 300
  3. discount of $57 200
  4. discount of $29 744.
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