Prepare the journal entry for the following: On Jan 1, 2021, Raymond Corporation issued $300,000 of...
Prepare the journal entry for the following:
On Jan 1, 2021, Raymond Corporation issued $300,000 of 10% bonds at 105. Each $1,000 bond was sold with 25 detachable stock warrants, each permitting the investor to purchase one share of common stock for $17. On that date, the market value of the common stock was $15 per share and the market value of each warrant was $2.
Homework Answers
Journal Entry:
| Date | Account Titles and Explanations | Debit | Credit |
| Jan. 1, 2021 | Cash ($300,000*1.05) | $315,000 | |
| Bonds Payable | $300,000 | ||
| Paid-in Capital - Stock Warrants ($300,000/$1,000 = 300 bonds * 25 stock warrants * $2 per stock warrant) | $15,000 | ||
| (To record the issue of bonds) |
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