Accounting


Accounting Forum

AccountingCoach.com is the world's largest free online accounting course.


Not signed in (Sign In)

Categories

Vanilla 1.1.7 is a product of Lussumo. More Information: Documentation, Community Support.

Welcome Guest!
Want to take part in these discussions? If you have an account, sign in now.
If you don't have an account, apply for one now.

General Accounting Discussions: debt securities with detachable warrants

Bottom of Page

1 to 2 of 2

  1.  
  1.  
    Question reads:
    On Sep 1, 2005 , Sands Corp sold at 102 (plus accrued interest) 5,000 of its 9%, 10 year, $1,000 face value nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants; each warrant was for one commone shre at a specified option price of $10 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. Assume no market value is available for the bonds above. Interest is payable on December 1 and June 1. Bond issue costs of $20,000 were incurred.

    Prepare in general journal format the entry to record the issuance of the bonds.

    Can anyone walk me through this question, I am stuck on it.

    Thank you
    • CommentAuthorJadenoreo
    • CommentTimeMay 28th 2008
     
    FMV of Bond (102% of 20,000 ) 1.02(20,000)=20,400 20,000/23,400(20,000)= 17,436
    FMV of Warrant (1,000)($3 mkt price) 1,000($3)=3,000 3,000/23,4009(20,000)= 2,564

    20,400+3,000=23,400--Tot Aggregated FMV

    Bond transaction: Warrant transaction:
    Cash 17,436 Cash 17,436
    Prem. Bonds Pay. 2,564 Paid-in-Cap.--Stk Warrant 17,436

    This should be right take more opinions before you dedcide your final answers
    Bonds Pay. 20,000
    Thankful People: marypmiller

1 to 2 of 2

  1.  



 

Why AccountingCoach.com?

the accounting coach

AccountingCoach.com is designed to help people without an accounting background easily understand accounting concepts at no cost.


By investing thousands of hours, we have created clear and concise accounting information for both business people and students of all ages.


We understand how difficult accounting can be. That's why we have ensured that each accounting topic includes a clear explanation, reinforcing drills, Q&A, puzzles, dictionary of terms, etc.


Read 1,440 Visitor Testimonials



What's on AccountingCoach.com?