Your answer is partially correct. Try again. Eisner Corporation issued 2,250 $1,

Question

Your answer is partially correct. Try again. Eisner Corporation issued 2,250 $1,000 bonds at 102. 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 $42. 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. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. $2,575.)

Explanation / Answer

journal entry

Fair value of bonds

(2250 *1000*99)                      = $2,227,500

Fair value of warrants

(2250*42)                                =        94,500

Total fair value                     = $2,322,000

Allocated to bonds

(2227.5/2332 * 2295,000       =         $2,201,599

Allocated to warrants

(94.5/2322 * 2295,000)        =                  93,401

total                                   =               $2,295,000

Cash $2296,000 Discount on bonds payabel      48,401 Bonds payable $2250,000 Paid- in Capital - Stock Warrant      93,401

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