The stockholders equity section of Whaler Inc. at the beginning of the current year appears below. Common
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Question:
The stockholders’ equity section of Whaler Inc. at the beginning of the current year appears below.
Common stock, $1 par value, authorized 5,000,000 | |
shares, 800,000 shares issued and outstanding | $ 800,000 |
Paid-in capital in excess of par—common stock | 16,100,000 |
Retained earnings | 260,000 |
During the current year, the following transactions occurred.
- The company issued to the stockholders 500,000 rights. Ten rights are needed to buy one share of stock at $21. The rights were void after 30 days. The market price of the stock at this time was $22 per share.
- The company sold to the public a $1,000,000, 6% bond issue at 106. The company also issued with each $1,000 bond a detachable stock purchase warrant, which provided for the purchase of common stock at $20 per share. Shortly after issuance, similar bonds without warrants were selling at 97 and the warrants at $10.
- All but 75,000 of the rights issued in (1) were exercised in 30 days.
- At the end of the year, 60% of the warrants in (2) had been exercised.
- During the current year, the company granted stock options for 100,000 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $2.60. The option price is $25. The options were to expire at year-end and were considered compensation for the current year.
- 20,000 shares related to the stock-option plan were exercised.
Instructions
Prepare general journal entries for the current year to record the transactions listed above.
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