Homework Solutions  
» Home
  

See All Homework
Questions here

Question Description

 
Posted by: Homeworkhelp
Price Quoted by Student: $6
Posted On: 2018-06-11 12:12:46
 
Question
E16-7 Illiad Inc. has decided to raise additional capital by issuing $170,000 face value of bonds with a coupon rate of 10%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $136,000, and the value of the warrants in the market is $24,000. The bonds sold in the market at issuance for $152,000.

(a) What entry should be made at the time of the issuance of the bonds and warrants? (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation Debit Credit
(b) Prepare the entry if the warrants were nondetachable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)


 
TUTORIAL PREVIEW
(a)        Basic formulas:
Value of bonds without warrants
X Issue price = Value assigned to bonds
Value of bonds without warrants + Value of warrants



Solutions
TUTORIAL PREVIEW (a)     
Price $6
Attachment 1: E16-7 Illiad Inc.docx
Solution Posted By: Homeworkhelp    Posted on: 11-06-2018