Question

Hoffman Corporation issued $60 million of 5%, 20-year bonds at 102. Each of the 60,000 bonds was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $20, one share of $1 par common stock. At the time of sale, the market value of the common stock was $25 per share and the market value of each warrant was $5. Prepare the journal entry to record the issuance of the bonds. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Record the issuance of the bonds.
Note: Enter debits before credits.

Event General Journal Debit Credit
1 Cash
Discount on bonds payable
Bonds payable
Equity—stock warrants

Answer 1

Answer:

The entries for the economic event given in the problem are the following.

Explanation:

Account Title                                                         Dr            Cr

Cash                                                                        61.2

Discount on Bonds Payable                                   1.8

Bonds Payable                                                                         60.0

Equity- Stocks Warrants                                                          3.0