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slamgirl [31]
3 years ago
15

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.
Business
1 answer:
ivann1987 [24]3 years ago
3 0

Answer:

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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