rane Corporation issued 4,400, five year, 4% bonds at 104 on January 1, 2020. Interest is paid annually. Each $1,000 bond carried one etachable warrant allowing the holder to purchase 100 common shares in Crane at $10 per share, the price at which Crane shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 5%. On June 30, 2020, 880 of he bond holders exercised the options to buy the shares. repare the journal entries to record these events. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final nswer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

rane Corporation issued 4,400, five year, 4% bonds at 104 on January 1, 2020. Interest is paid annually. Each $1,000 bond carried one etachable warrant allowing the holder to purchase 100 common shares in Crane at $10 per share, the price at which Crane shares were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 5%. On June 30, 2020, 880 of he bond holders exercised the options to buy the shares. repare the journal entries to record these events. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final nswer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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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Question

Crane Corporation issued 4,400, five year, 4% bonds at 104 on January 1, 2020. Interest is paid annually. Each $1,000 bond carried one
detachable warrant allowing the holder to purchase 100 common shares in Crane at $10 per share, the price at which Crane shares
were trading on the day of the sale of the bonds. Similar straight bonds trading on the open market paid 5%. On June 30, 2020, 880 of
the bond holders exercised the options to buy the shares.
Prepare the journal entries to record these events. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final
answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date
Jan. 1, 2020
Jun. 30,
2020
Account Titles and Explanation
Cash
Bonds Payable
Contributed Surplus - Stock Warrants
Cash
Contributed Surplus - Stock Warrants
Common Shares
Debit
4576000
100
880,000
88000
Credit
4,400,000
176,000
800000

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