Question

On July 1, 2017, Roberts Corporation issued \(3,000,000 of 9% bonds payable in 20 years. The bonds include detachable warrants giving the bondholder the right to purchase for \)30 one share of \(1 par value common stock at any time during the next 10 years. The bonds were sold for \)3,000,000. The value of the warrants at the time of issuance was $100,000. Prepare the journal entry to record this transaction.

Short answer

Cash account and discount on bonds payable will be debited with $3,000,000 and $100,000 respectively. Bonds payable and Paid-In capital- Stock warrants account will be credited with $3,000,000 and $100,000 respectively.

Step-by-step solution

The details provided in the question are as follows

We have

Bond Payable $3,000,000

Stock Warrants $100,000

Representing given data in journals for of accounting

Date	Particulars	Debit	Credit
	Cash	3,000,000
	Discount on Bonds Payable	100,000
	Bonds Payable		3,000,000
	Paid-in Capital—Stock Warrants		100,000
	Being sale of bond is recorded