On August $1,2024,$ Perez Communications issued $\backslash (\backslash$$ $28\backslash )$ million of $\backslash (10\backslash \%\backslash )$ nonconvertible bonds at $105.$

$-$ The bonds are due on July $31,2044.$

$-$ Each $\backslash (\backslash$$ $1,000\backslash )$ bond was issued with $30$ detachable stock warrants, each of which entitled the bondholder to purchase, for $\backslash (\backslash$$ $50\backslash ),$ one share of Perez Communications' no par common stock.

$-$ Interstate Containers purchased $\backslash (20\backslash \%\backslash )$ of the bond issue.

$-$ On August $1,2024,$ the market value of the common stock was $\backslash (\backslash$$ $45\backslash )$ per share and the market value of each warrant was $\backslash (\backslash$$ $5\backslash ).$

In February $2035,$ when Perez common stock had a market price of $\backslash (\backslash$$ $59\backslash )$ per share and the unamortized discount balance was $\backslash (\backslash$$ $1\backslash )$ million, Interstate Containers exercised the warrants it held.

Required:

$1.$ Prepare the journal entries on August $1,2024,$ to record $($a$)$ the issuance of the bonds by Perez and $($b$)$ the investment by Interstate.

$2.$ Prepare the journal entries for both Perez and Interstate in February $2035,$ to record the exercise of the warrants.

Complete this question by entering your answers in the tabs below.

Prepare the journal entries on August $1,2024,$ to record $($a$)$ the issuance of the bonds by Perez and $($b$)$ the investment by Interstate.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Enter your answers in millions and round to $2$ decimal places $($i$.$e$.,5,500,000$ should be entered as $5\mathrm{.}50).$

Journal entry worksheet

A

B

Record the issuance of the bonds by Perez.

Note: Enter debits before credits.