*Question 9 On May 1, 2017, Bridgeport Company issued 2,300 $1,000 bonds at 102.

Question

*Question 9 On May 1, 2017, Bridgeport Company issued 2,300 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. Shortly after issuance, the bonds were selling at 99, but the fair value of the warrants cannot be determined (a) Prepare the entry to record 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 O for the amounts.) Account Titles and Explanation Debit Credit (b) Assume the same facts as part (a), except that the warrants had a fair value of $28. Prepare the entry to record 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. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to O decimal places,e.g. 5,125.) Account Titles and Explanation Debit Credit Question Attempts: 0 of 5 used

Explanation / Answer

a Cash 2346000 =2300*1000*1.02 Discount on Bonds Payable 23000 =2300*1000*0.01        Bonds Payable 2300000        Paid-in Capital—Stock Warrants 69000 b Market value of bonds without warrants 2277000 =2300*1000*0.99 Market value of warrants 64400 =2300*28 Total market value 2341400 Cash 2346000 Discount on Bonds Payable 18527        Bonds Payable 2300000        Paid-in Capital—Stock Warrants 64527 =2346000/2341400*64400

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