Hoffman Corporation issued $60 million of 5%, 20-year bonds at 102. Each of the 60,000 bonds was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $20, one share of $1 par common stock. At the time of sale, the market value of the common stock was $25 per share and the market value of each warrant was $5. Prepare the journal entry to record the issuance of the bonds. (Enter your answers in millions rounded to 1 decimal place (i. e., 5,500,000 should be entered as 5.5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the issuance of the bonds.

Note: Enter debits before credits.

Event General Journal Debit Credit

1 Cash

Discount on bonds payable

Bonds payable

Equity-stock warrants

Question

Business

Ashlee Lyons

24 December, 22:40

Hoffman Corporation issued $60 million of 5%, 20-year bonds at 102. Each of the 60,000 bonds was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $20, one share of $1 par common stock. At the time of sale, the market value of the common stock was $25 per share and the market value of each warrant was $5. Prepare the journal entry to record the issuance of the bonds. (Enter your answers in millions rounded to 1 decimal place (i. e., 5,500,000 should be entered as 5.5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the issuance of the bonds.

Note: Enter debits before credits.

Event General Journal Debit Credit

1 Cash

Discount on bonds payable

Bonds payable

Equity-stock warrants

+3

Answers (1)

Know the Answer?

Marshall Blair · Answer 1

The entries for the economic event given in the problem are the following.

Explanation:

Account Title Dr Cr

Cash 61.2

Discount on Bonds Payable 1.8

Bonds Payable 60.0

Equity - Stocks Warrants 3.0