Answer:
Journal Entry
Explanation:
The Journal Entry is shown below:-
1. Cash Dr,                                                $19,618,250
Discount on bonds payable Dr,               $606,750
           To Bonds payable                                           $20,225,000
(Being Bonds issued is recorded)
Working Note:-
Cash = ($20,225,000 × (97 ÷ 100)
=  $19,618,250
So, the bonds has been issued a discount. The par value of the bonds is 100.
2. Cash Dr,                                                $19,416,000
Discount on bonds payable Dr,               $1,820,250
           To Bonds payable                                           $20,225,000  
           To Paid in capital share warrants                   $1,011,250
(Being bonds issued is recorded)
Working Note:-
The Value of bonds issued at a discount
So, value of bonds = ($20,225,000 × ($96 ÷ $100)
= $19,416,000
Now, Value of warrants = ($20,225,000 ÷ 100) × $5
= $1,011,250
Total value of bonds including warrants = Value of bonds + Value of warrants
= $19,416,000 + $1,011,250
= $21,236,250
3. Debt conversion expense Dr,      $78,300
Bonds payable Dr,                             $10,342,000
           To discount payable                            $58,600
            To common stock                               $1,034,200
            To paid in capital in excess
             of common stock                                $9,249,200
            To cash                                                  $78,300
(Being debt conversion is recorded)