On January 1 of Year 1, Friday Corporation issued $1,300,000 of 6%, nonconvertible bonds dated January...

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On January 1 of Year 1, Friday Corporation issued $1,300,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Bonds $ Warrants $ Date Jan. 1, Year 11 Total Amount 0 Date Jan 1 year 1 Next, record the entry for issuance of the bonds. • Note: Use the proportion of toal EXACTLY as displayed in your calculations below. Proportion of Total Account Name To record bond issuance % % 0% Account Name v Dr. b. Record the entry for the subsequent exercise of the 26,000 stock purchase warrants on January 2 of Year 1. Cr. Dr. Cr. Next, record the entry for issuance of the bonds. • Note: Use the proportion of toal EXACTLY as displayed in your calculations below. Date Jan. 1, Year 1 Account Name Date Jan. 2, Year 1 To record bond issuance b. Record the entry for the subsequent exercise of the 26,000 stock purchase warrants on January 2 of Year 1. Account Name Dr. To record conversion of warrants Cr. Dr. Cr. On January 1 of Year 1, Friday Corporation issued $1,300,000 of 6%, nonconvertible bonds dated January 1 with detachable stock purchase warrants at a price of 106. Each $1,000 bond carries 20 detachable stock purchase warrants, each of which calls for the purchase of one share of Friday's common stock, par $50, at the specified exercise price of $60 per share. Upon issuance, the detachable stock purchase warrants were immediately quoted at $1 each in the market, and the bonds were quoted at 102 without the warrants. Required a. First, calculate the allocation proportion for both bonds and warrants. Bonds $ Warrants $ Date Jan. 1, Year 11 Total Amount 0 Date Jan 1 year 1 Next, record the entry for issuance of the bonds. • Note: Use the proportion of toal EXACTLY as displayed in your calculations below. Proportion of Total Account Name To record bond issuance % % 0% Account Name v Dr. b. Record the entry for the subsequent exercise of the 26,000 stock purchase warrants on January 2 of Year 1. Cr. Dr. Cr. Next, record the entry for issuance of the bonds. • Note: Use the proportion of toal EXACTLY as displayed in your calculations below. Date Jan. 1, Year 1 Account Name Date Jan. 2, Year 1 To record bond issuance b. Record the entry for the subsequent exercise of the 26,000 stock purchase warrants on January 2 of Year 1. Account Name Dr. To record conversion of warrants Cr. Dr. Cr.

Answer rating: 100% (QA)

a Calculation of Allocation Proportion Bonds Total Bonds Issued 1300000 Proportion of Bonds Total Bo... View the full answer