On April 7, 2018, Marigold Corp. sold a $6250000, twenty-year, 9 percent bond is

Question

On April 7, 2018, Marigold Corp. sold a $6250000, twenty-year, 9 percent bond issue for $6625000. Each $1000 bond has two detachable warrants, each of which permits the purchase of one share of the corporation's common stock for $30. The stock has a par value of $25 per share. Immediately after the sale of the bonds, the corporation's securities had the following market values:

$1007

21

29

What accounts should Marigold credit to record the sale of the bonds? (rounded to the nearest dollar)

$1007

21

29

Explanation / Answer

(6250 × $1,007) + (#12500× $21) = 6556250 6250*1007 *6625000 = 6359747 6556250 Less Bond 6250000 Premium 109747 (12500 × $21) * 6625000 = 2,65,253 6556250 #6250*2=12500 Bonds Payable $62,50,000 Premium on Bonds Payable $1,09,747 Paid-in Capital—Stock Warrants $2,65,253

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