Question

# Carla Corporation issued 2,200 \$1,000 bonds at 103. Each bond was issued with one detachable stock...

Carla Corporation issued 2,200 \$1,000 bonds at 103. 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 \$46.

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. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to 0 decimal places, e.g. 5,125.)

 Account Titles and Explanation Debit Credit

 Answer the books of Carla Corporation: Transaction Account Titles Debit Credit \$ \$ 1 Cash (2,200 x 1,000 x 103 %) \$2,266,000 Discount on Bonds Payable \$     35,595 Bonds Payable (2200*1000) \$2,200,000 Paid-in Capital : Stock Warrants \$   101,595 Note: Bond issue proceeds proportionately allocated to bonds: \$ 2,266,000 x 980 / (980 + 46) = \$ 2,164,405 Discount on bonds payable = \$ 2,200,000 - \$ 2,164,405 = \$ 35,595

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