On September $30,2023,$ Riverwood Co$.$ issued a $$1$ million, $8\%,15-$year convertible bond maturing on September $30,2038,$ with semi$-$annual coupon payments on March $31$ and September $30.$ Each $$1,000$ bond can be

converted into $40$ no par value common shares. In addition, each bond included $15$ detachable common stock warrants with an exercise price of $$28$ each. Inmediately after issuance, the warrants traded at $$6$ each on the open

market. Gross proceeds on issuance were $$1,500,000.$ Without the warrants and conversion features, the bond would be expected to yield $6\%$ annually. Riverwood's year$-$end is December $31.$

On February $22,2026,$ warrant holders exercised one$-$half of the warrants. The shares of Riverwood traded at $$38$ each on this day.

Required

a$.$ Determine how Riverwood should allocate the $$1,500,000$ proceeds into its

components. Assume that the warrants are initially recognized at the market

value of $$6$ each.

b$.$ Prepare all the journal entries for fiscal year $2023.$

c$.$ Record the journal entry for the exercise of stock warrants on February $22,2026.$ Assume that the warrants are initially recognized at the market value of $$6$ each.

al answers to the nearest whole dollar. Enter all amounts in dollars and not in millions.$)$

Begin oy preparing the entry to recod the convertiole bonas Issued by Riverwood co$.$ on seprember $30,2023.($Record debits first, then credits. E