Vernon Corporation offered detachable 5-year warrants to buy one share of common stock (par value $5)...

Vernon Corporation offered detachable 5-year warrants to buy one share of common stock (par value $5) at $20 (at a time when the stock was selling for $32). The price paid for 800, $1,000 bonds with the warrants attached was $820,000. The market price of the Vernon bonds without the warrants was $720,000, and the market price of the warrants without the bonds was $80,000. prepare journal entry. please give step by step

Expert Solution

Value Assigned to Bonds = (Value of Bonds without warrants / (Value of Bonds without warrants + Value of Warrants) X Issue Price
Value Assigned to Bonds = ($720,000 / (720,000 + $80,000)) X $820,000
Value Assigned to Bonds = $738,000

Value Assigned to Warrants = (Value of warrants / (Value of Bonds without warrants + Value of Warrants) X Issue Price
Value Assigned to Warrants = ($80,000 / (720,000 + $80,000)) X $820,000
Value Assigned to Warrants = $82,000

Journal Entry
Date	Particulars	Dr. Amt	Cr. Amt.

1	Cash	820,000.00
	Discount on Issue of Bonds	62,000.00		$800,000 - $738,000
	Bonds Payable		800,000.00
	Paid-In Capital - Stock Warrants		82,000.00
	(record the issue of Bonds with warrants)

ekkarill92 answered 1 year ago

If a corporation issues 5,000 shares of $5 par value common stock for $ 90,000, the...

If a corporation issues 5,000 shares of $5 par value common stock for $ 90,000, the journal entry would include a credit to: A.Common Stock for $ 90,000. B.Common Stock for $ 65,000. C.Paidminusin Capital in Excess of Parlong dashCommon for $ 90,000. D.Paidminusin Capital in Excess of Parlong dashCommon for $ 65,000. If a corporation issues 2,000 shares of $1 par value common stock for $ 10,000, the journal entry would include a credit to: A.Common Stock for $...

A corporation originally issued $7 par value common stock for $13 per share. It purchased the...

A corporation originally issued $7 par value common stock for $13 per share. It purchased the stock for $17 per share. Which of the following is included in the entry to record the sale of 20 shares of treasury stock for $18 per share? A Paid-In Capital from Treasury Stock Transactions is credited for $360. B Treasury Stock - Common is credited $340. C Treasury Stock - Common is credited $360. D Paid-In Capital from Treasury Stock Transactions is debited...

What is the current par value of a share of Home Depot's common stock?

Pomona Corporation issued 60,000 shares of $3 par value common stock at $21 per share and 9,000 shares of $30 par value

Treasury Stock Pomona Corporation issued 60,000 shares of $3 par value common stock at $21 per share and 9,000 shares of $30 par value, ten percent preferred stock at $85 per share. Later, the company purchased 2,000 shares of its own common stock at $23 per share. a. Prepare the journal entries to record the share issuances and the purchase of the common shares. b. Assume that Pomona sold 1,500 shares of the treasury stock at $30 per share. Prepare the general journal...

. Excalibur Corporation is authorized to issue 3,000,000 shares of $5 par value common stock. During...

. Excalibur Corporation is authorized to issue 3,000,000 shares of $5 par value common stock. During 2019, its first year of operation, the company has the following stock transactions. Jan. 15 Issued 600,000 shares of stock at $13 per share. July 2 Issued 100,000 shares of stock in exchange for a building. The building had an asking price of $1,000,000. The stock is currently selling at $9 per share. Sept. 5 Purchased 5,000 shares of common stock for the treasury...

Return on Common Stock You buy a share of The Ludwig Corporation stock for $21.10. You...

Return on Common Stock You buy a share of The Ludwig Corporation stock for $21.10. You expect it to pay dividends of $1.03, $1.15, and $1.2840 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $29.94 at the end of 3 years. Calculate the growth rate in dividends. Round your answer to two decimal places. % Calculate the expected dividend yield. Round your answer to two decimal places. % Assuming that the...

1.Boris Corporation issued 25,000 shares of $10 par value common stock at $30 per share. As...

1.Boris Corporation issued 25,000 shares of $10 par value common stock at $30 per share. As a result of this transaction, Boris Corporation’s: A. Paid in Capital in Excess of Par Value increased by $250,000 B. Paid in Capital in Excess of Par Value increased by $750,000 C. Common Stock increased by $250,000 D. Common Stock increased by $750,000 2.Karin, Inc. has 5,000 shares of 6%, $200 par value, cumulative preferred stock and 100,000 shares of $2 par value common...

Nash Corporation is authorized to issue 55,000 shares of $5 par value common stock. During 2017,...

Nash Corporation is authorized to issue 55,000 shares of $5 par value common stock. During 2017, Nash took part in the following selected transactions. 1. Issued 4,500 shares of stock at $42 per share, less costs related to the issuance of the stock totaling $9,100. 2. Issued 1,200 shares of stock for land appraised at $55,000. The stock was actively traded on a national stock exchange at approximately $43 per share on the date of issuance. 3. Purchased 480 shares...

Nasser Corporation is authorized to issue 80,000 shares of $5 par value common stock. During 2008,...

Nasser Corporation is authorized to issue 80,000 shares of $5 par value common stock. During 2008, Lindsey Hunter took part in the following selected transactions. 1. Issued 10,000 shares of stock at $50 per share, less costs related to the issuance of the stock totaling $10,000. 2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $48 per share on the date of issuance. 3. Purchased 500...

Monty Corporation is authorized to issue 53,000 shares of $5 par value common stock. During 2017,...

Monty Corporation is authorized to issue 53,000 shares of $5 par value common stock. During 2017, Monty took part in the following selected transactions. 1. Issued 5,300 shares of stock at $48 per share, less costs related to the issuance of the stock totaling $4,900. 2. Issued 1,100 shares of stock for land appraised at $53,000. The stock was actively traded on a national stock exchange at approximately $49 per share on the date of issuance. 3. Purchased 500 shares...

Question