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21 August, 02:31

Eisler Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market price of $40. Use the proportional method to record the issuance of the bonds and warrants.

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  1. 21 August, 03:01
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    The journal entry is as follows:

    Cash A/c Dr. $2,020,000

    Discount on bonds payable A/c Dr. $59,216

    To Bonds payable $2,000,000

    To Paid in capital - stock warrants $79,216

    (To record the issuance of the bonds and warrants)

    Workings:

    Cash:

    = 2,000 * $1,000 * 101%

    = $2,020,000

    Discount on bonds payable:

    = 2,000,000 - 2,020,000 * (980 : 1,020)

    = $59,216
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