Chapter 16: 7E (page 876)
(Issuance of Bonds with Warrants) Illiad Inc. has decided to raise additional capital by issuing
Instructions
(a) What entry should be made at the time of the issuance of the bonds and warrants?
(b) If the warrants were nondetachable, would the entries be different? Discuss.
Short Answer
- Cash debited by $152,000, discount on bonds payable debited by $40,800, bond payable credited by $170,000 and paid-in capital stock warrants credited by $22,800.
- Cash debited by $152,000, discount on bond payable debited by $18,000 and bond payable credited by $170,000.
The paid-in capital of the stock warrants is $22,800.