Skysong Inc. has decided to raise additional capital by issuing $185,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $126,400, and the value of the warrants in the market is $31,600. The bonds sold in the market at issuance for $150,000. (a) What entry should be made at the time of the issuance of the bonds and warrants? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to O decimal places, e.g. 5,125.) Account Titles and Explanation Cash Discount on Bonds Payable Bonds Payable Paid-in Capital-Stock Warrants Debit Account Titles and Explanation (b1) Prepare the entry if the warrants were nondetachable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to O decimal places, e.g. 5,125.) Credit Debit Credit
Skysong Inc. has decided to raise additional capital by issuing $185,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $126,400, and the value of the warrants in the market is $31,600. The bonds sold in the market at issuance for $150,000. (a) What entry should be made at the time of the issuance of the bonds and warrants? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to O decimal places, e.g. 5,125.) Account Titles and Explanation Cash Discount on Bonds Payable Bonds Payable Paid-in Capital-Stock Warrants Debit Account Titles and Explanation (b1) Prepare the entry if the warrants were nondetachable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to O decimal places, e.g. 5,125.) Credit Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
5
Transcribed Image Text:Skysong Inc. has decided to raise additional capital by issuing $185,000 face value of bonds with a coupon rate of 10%. In discussions
with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate
of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $126,400, and the value of
the warrants in the market is $31,600. The bonds sold in the market at issuance for $150,000.
(a) What entry should be made at the time of the issuance of the bonds and warrants? (Credit account titles are automatically indented
when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.
Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to O decimal places, e.g. 5,125.)
Account Titles and Explanation
Cash
Discount on Bonds Payable
Bonds Payable
Paid-in Capital-Stock Warrants
Debit
Account Titles and Explanation
1
(b1) Prepare the entry if the warrants were nondetachable. (Credit account titles are automatically indented when amount is entered. Do
not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round intermediate calculations
to 5 decimal places, e.g. 1.24687 and final answers to O decimal places, e.g. 5,125.)
Debit
Credit
Credit
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