The company issued 20,000 shares of 7%, $50 par preferred stock. Associated with each share of stock was a detachable
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, and the preferred stock could have been issued for $52 if issued alone. Some time 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.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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