On December 1, 2014, Universal Coat Company sold 10,000 of its 10%, 15-year, $1,000 face value, nonconvertible

Question:

On December 1, 2014, Universal Coat Company sold 10,000 of its 10%, 15-year, $1,000 face value, nonconvertible bonds with detachable stock warrants at 102. Each bond carried three detachable warrants. Each warrant was for one share of common stock at a specified option price of $27 per share. Shortly after issuance, the warrants were quoted on the market for $2.50 each. No market value can be determined for the Universal Coat Company bonds. Interest is payable on December 1 and June 1. Bond issue costs of $65,000 were incurred.

Instructions

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

(AICPA adapted)

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...