Question: The company issued 20 000 shares of 7 50 par preferred stock
The company issued 20,000 shares of 7%, $50 par preferred stock. Associated with each share of stock was a detachable common stock warrant. Each warrant entitles the holder to purchase one share of the company’s $1 par common stock for $20 per share. Each unit (one share of preferred stock and one warrant) was issued for $55. It is estimated that each warrant could have been issued for $3 if issued alone. Sometime after the issuance, all of the warrants were exercised. Make the journal entries necessary to record both the issuance of the preferred stock-warrant units and the subsequent exercise of the warrants.
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