Question 1 On May 1, 2018, Swifty Corporation issued $2050000 of 6% bonds at 104
ID: 2550306 • Letter: Q
Question
Question 1 On May 1, 2018, Swifty Corporation issued $2050000 of 6% bonds at 104, which are due on April 30, 2028. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Swifty's common stock, $15 par value, were attached to each $1000 bond. The bonds without the warrants would sell at 96. On May 1, 2018, the fair value of Swifty's common stock was $36 per share and of the warrants was $2. On May 1, 2018, Swifty should credit Paid-in Capital from Stock Warrants for $82000 $123000 $85280Explanation / Answer
Answer : $85280
Explanation
=($2,050,000 x 0.96) + (2050 x 20 x $2)
= $1,968,000 + $82,000 = $2,050,000
=$2,050,000 x 1.04 = $2,132,000
Paid in capital = ($82,000 / $2,050,000) x $2,132,000
= $85,280
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