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Hoffman Corporation issued $95 million of 5%, 10-year bonds at 102. Each of the 95,000 bonds...

Hoffman Corporation issued $95 million of 5%, 10-year bonds at 102. Each of the 95,000 bonds was issued with 12 detachable stock warrants, each of which entitled the bondholder to purchase, for $28, one share of $1 par common stock. At the time of sale, the market value of the common stock was $33 per share and the market value of each warrant was $5.

Prepare the journal entry to record the issuance of the bonds.

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Answer #1
Journal entries
ACCOUNT TITLES AND EXPLANATIONS DEBIT ($) CREDIT  
($ in million) ($ in million)
Cash ($95 x 102%)                96.90
Discount on bonds payable (Balancing figure)                  3.80
Bond Payable                95.00
Equity—Stock Warrants ($5 x 12 warrants × 95,000 bonds)                  5.70
(to record the issuance of the bonds)
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