Eisler Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 98, and the warrants had a market price of $40. Use the proportional method to record the issuance of the bonds and warrants.

The journal entry is as follows:

Cash A/c Dr. $2,020,000

Discount on bonds payable A/c Dr. $59,216

To Bonds payable $2,000,000

To Paid in capital - stock warrants $79,216

(To record the issuance of the bonds and warrants)

Workings:

Cash:

= 2,000 * $1,000 * 101%

= $2,020,000

Discount on bonds payable:

= 2,000,000 - 2,020,000 * (980 : 1,020)

= $59,216