Next, record the entry for issuance of the bonds. Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1. Date Account Name Jan. 1, Year 1 Cash Bonds Payable Date Paid-in Capital-Stock Warrants Premium on Bonds Payable To record bond issuance Jan. 2, Year 1 Cash Check Account Name Paid-in Capital-Stock Warrants Common Stock Paid-in Capital in Excess of Par-Common Stock To record conversion of warrants Dr. Cr. 954,000 0 ✓ 0 900,000 0 3,600 x 0 54,000 x Dr. 1,080,000 Cr. v 53,000 0 x 0 900,000 v 0 180,000 x Recording Entries for Bonds with Detachable Warrants On January 1 of Year 1, Friday Corporation issued $900,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Total Amount Proportion of Total Bonds Warrants 918,000 98% 18,000 936,000 100% Next, record the entry for issuance of the bonds. •Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.
Next, record the entry for issuance of the bonds. Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1. Date Account Name Jan. 1, Year 1 Cash Bonds Payable Date Paid-in Capital-Stock Warrants Premium on Bonds Payable To record bond issuance Jan. 2, Year 1 Cash Check Account Name Paid-in Capital-Stock Warrants Common Stock Paid-in Capital in Excess of Par-Common Stock To record conversion of warrants Dr. Cr. 954,000 0 ✓ 0 900,000 0 3,600 x 0 54,000 x Dr. 1,080,000 Cr. v 53,000 0 x 0 900,000 v 0 180,000 x Recording Entries for Bonds with Detachable Warrants On January 1 of Year 1, Friday Corporation issued $900,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Total Amount Proportion of Total Bonds Warrants 918,000 98% 18,000 936,000 100% Next, record the entry for issuance of the bonds. •Note: Use the proportion of toal EXACTLY as displayed in your calculations below. b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 7EA: On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The...
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Question
Transcribed Image Text:Next, record the entry for issuance of the bonds.
Note: Use the proportion of toal EXACTLY as displayed in your calculations below.
b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.
Date
Account Name
Jan. 1, Year 1 Cash
Bonds Payable
Date
Paid-in Capital-Stock Warrants
Premium on Bonds Payable
To record bond issuance
Jan. 2, Year 1 Cash
Check
Account Name
Paid-in Capital-Stock Warrants
Common Stock
Paid-in Capital in Excess of Par-Common Stock
To record conversion of warrants
Dr.
Cr.
954,000
0 ✓
0
900,000
0
3,600 x
0
54,000 x
Dr.
1,080,000
Cr.
v
53,000
0 x
0
900,000
v
0
180,000 x
Transcribed Image Text:Recording Entries for Bonds with Detachable Warrants
On January 1 of Year 1, Friday Corporation issued $900,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond
carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon
issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants.
Required
a.
First, calculate the allocation proportion for both bonds and warrants.
Total
Amount
Proportion
of Total
Bonds
Warrants
918,000
98%
18,000
936,000
100%
Next, record the entry for issuance of the bonds.
•Note: Use the proportion of toal EXACTLY as displayed in your calculations below.
b. Record the entry for the subsequent exercise of the 18,000 stock purchase warrants on January 2 of Year 1.
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