Use the information given below to answer Questions 37 - 41. On January 1, 2021, Alpha, Inc., issued 2,600 of its' 5% 10-year convertible bonds, par value $1,000 at 130. Included with each bond were 25 detachable warrants. Each warrant entitled its holder to purchase one share from Alpha at a price of $28. Further, each $1,000 bond was convertible, at the option of the holder, into 40 common shares. Interest was to be paid by the company on June 30 and December 31. The underwriter estimated the market value of the bonds alone, excluding warrants and conversion rights, to be $2,900,000. Similar warrants were being traded at a market value of $5 each at the date of issue. The company uses ASPE for its accounts and amortizes the bonds using straight line and uses the residual value method to account for bond issuances. [37] The correct journal entry to record bonds issuance is: Select one: a. (dr) bonds payable $2,900,000; (cr) Cash $3,380,000; (cr) Contributed surplus- warrants $311,000; (cr) Contributed surplus- Conversion rights $169,000. b. (dr) Cash $3,380,000; (cr) bonds payable $2,900,000; (cr) Contributed surplus- warrants $325,000; (cr) Contributed surplus- Conversion rights $155,000. c. (dr) Cash $3,380,000; (cr) bonds payable $3,380,000. d. (dr) Cash $3,380,000; (cr) bonds payable $2,900,000; (cr) Contributed surplus-warrants $480,000. [38] The correct journal entry to record the interest expense on June 30, 2021 is: Select one: a. (dr) interest expense $50,000; (dr) bonds payable $15,000; (cr) cash $65,000. b. (dr) interest expense $65,000; (cr) cash $65,000. c. (dr) interest expense $72,500; (cr) bonds payable $7,500; (cr) cash $65,000. d. (dr) interest expense $80,000; (cr) bonds payable $15,000; (cr) cash $65,000. e. None of the above