The wiggles Co issued bonds with a face value of 50,000. (There are 50 $100 bonds.) Attached to each bond are stock warrants giving the holder the right to buy 2 shares of stock at $20 per share. The fair value of the warrants is determined to be $10 per warrant (there are 50 warrants). The fair value of the bonds without the warrants is determined to be $49,000. The Par value of the stock is $10.

Required:

Prepare the journal entry (or entries if you use multiple entries) for the issuance of the bonds assuming cash received is $49,500.

Prepare the journal entry (or entries if you use multiple entries) for the issuance of the bonds assuming cash received is $50,000.

For Part two above, prepare the journal entry if, two years later, 60% of the warrants are exercised.

Answer rating: 100% (QA)

Solution Ans 1 Journal Entry for issuance of bond cash rece... View the full answer