On September 1, 2020, Kingbird Company sold at 104 (plus accrued interest) 5,400 of its 9%,...

On September 1, 2020, Kingbird Company sold at 104 (plus accrued interest) 5,400 of its 9%, 10-year, $1,000 face value, nonconvertible bonds with detachable stock warrants. Each bond carried two detachable warrants. Each warrant was for one share of common stock at a specified option price of $15 per share. Shortly after issuance, the warrants were quoted on the market for $3 each. No fair value can be determined for the Kingbird Company bonds. Interest is payable on December 1 and June 1.

Prepare in general journal format the entry to record the issuance of the bonds. (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.)

Account Titles and Explanation	Debit	Credit

Expert Solution

Journal Entry
Account Titles and Explanations	Debit	Credit
Cash ($1,000 * 5,400 * 104/100)	$5,616,000
Bonds Payable ($1,000 * 5,400)		$5,400,000
Premium on Bonds Payable ($5,616,000 - $5,400,000)		$216,000
(To record the issuance of bonds at premium)

ekkarill92 answered 2 years ago

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