Brief Exercise 16-4 Flint Corporation issued 2,000 $1,000 bonds at 103. Each bon

Question

Brief Exercise 16-4

Flint Corporation issued 2,000 $1,000 bonds at 103. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 99, and the warrants had a market price of $44.

Use the proportional method 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 0 decimal places, e.g. 5,125.)

Account Titles and Explanation

Debit

Credit

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Account Titles and Explanation

Debit

Credit

Explanation / Answer

Accounting titles & Explanations Debit Credit Cash 2,060,000 Discount on bonds payable 27,660 Bonds payable 2,000,000 paid in capital -Stock warrants 87660 Calculation : number * amount * price = total percent Bonds 2000 * $1,000 * 0.99 =     1,980,000.0 95.74468% Warrants 2000 * $44 =          88,000.0 4.25532% Total Fair market value     2,068,000.0 Allocation : Bonds Warrants issue price 2060000 2060000 Bonds face value        2,000,000 allocation% 95.74468% 4.25532% Allocated FMV        1,972,340 Total 1972340 87660 Discount              27,660

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