Answer:
total sales value = 3,840 x $1,000 = $3,840,000 x 1.04 = $3,993,600
since each bond carried 2 detachable stock warrants, we must include in the bond issuance the value of the stock warrants = 3,840 bonds x 2 warrants x $2 per warrant = $15,360
the premium on bonds payable = total cash received - bonds payable - stock warrants = $3,993,600 - $3,840,000 - $15,360 = $138,240
the journal entry for recording the bond issuance:
September 1, 2020, 3,840 8% bonds issued
Dr Cash 3,993,600
Cr Bonds payable 3,840,000
Cr Premium on bonds payable 138,240
Cr Additional paid in capital - warrants 15,360
