rtil DIATE ACCOUNTING II> Assignments> Chapter 16 WileyPLUS homework 6 WileyPLUS

Question

rtil DIATE ACCOUNTING II> Assignments> Chapter 16 WileyPLUS homework 6 WileyPLUS homework Kieso, Intermediate Accounting, 16e Help I CALCULATOR PRINTER VERSON BACK Brief Exercise 16 5 Pearl Corporation issued 2,250?1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. ork Use the incremental method to record the issuance of the bonds and warrants. (Credit account titles are aut when ammount is entered. Do not indent manually I enter o for the amounts) Account Titles and Explanation Debit Credit Question Attempts: 0 of 5 used SAVE FOR LATER SUBHET ANSWER 2204697N10037

Explanation / Answer

* Bonds face value(2250×1000)=$2,250,000

Less Fair market value (2250×$1000×$.98)=$2,205,000

Discount=$45,000

** Issue price(2250×$1000×$1.01)=$2,272,500

Less bonds fair market value=$2,205,000

Warrants=$67,500

Account titles and explanation Debit Credit Cash(2,250×$1000×1.01) $2,272,500 Discount on bonds payable $45,000* Bonds payable(2250×$1000) $2,250,000 Paid in capital- stock warrants $67,500**

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