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value of $60. Record journal entries for the issuance of the bond, the first two interest payments, and any required adjusting entries for the fiscal year ending December 31, 2019.

value of $60. Record journal entries for the issuance of the bond, the first two interest payments, and any required adjusting entries for the fiscal year ending December 31, 2019.

FINANCIAL ACCOUNTING
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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On September 1, 2019, Schumpeter Conglomerates sold $230,000,000 20-year bonds with a coupon rate of 3% paid semi- annually. The market rate for a security of similar risk and maturity is 4%. Schumpeter Conglomerates hired Ivanov's Finance Shack to issue the securities at a cost of 2% of the selling price of the security. Attached to each $125,000 bond are six detachable warrants allowing for the purchase of 50 shares of no-par common stock for $15 per share. Each warrant is estimated to have a market value of $60. Record journal entries for the issuance of the bond, the first two interest payments, and any required adjusting entries for the fiscal year ending December 31, 2019.
Transcribed Image Text:On September 1, 2019, Schumpeter Conglomerates sold $230,000,000 20-year bonds with a coupon rate of 3% paid semi- annually. The market rate for a security of similar risk and maturity is 4%. Schumpeter Conglomerates hired Ivanov's Finance Shack to issue the securities at a cost of 2% of the selling price of the security. Attached to each $125,000 bond are six detachable warrants allowing for the purchase of 50 shares of no-par common stock for $15 per share. Each warrant is estimated to have a market value of $60. Record journal entries for the issuance of the bond, the first two interest payments, and any required adjusting entries for the fiscal year ending December 31, 2019.
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