1. Barker Industries issued 3 000 $1,000 bonds at 105. Each bond contains 20 detachable stock...

1. Barker Industries issued 3 000 $1,000 bonds at 105. Each bond contains 20 detachable stock warrants that allow the bondholder to purchase a share of Barker's common stock for $50. Immediately after the issue, the warrants were selling for $4 each and the bonds without the warrants were selling for $ 985. How much will be credited to Additional Paid-in Capital -Stock Warrants? (Round intermediate calculations to four decimal places and your final answer to the nearest dollar.) Use the proportional method. Answer is $236, 619. Just want to know how to calculate.

2. Harrison Corporation borrowed $ 33 000 from F&M Bank on June 1 of the current year. The bank required 6% interest. Interest will be paid when the nine-month note becomes due. What is the interest expense for the current year? (Do not round intermediate calculations. Only round your final answer to the nearest dollar.)

correct answer : $1155. Just want to know how to calculate.

3. Neil Corporation issued 5,000 $1,000 bonds at 103. Each bond contains 15 detachable stock warrants that allow the bondholder to purchase a share of Neil's common stock for $50. Immediately after the issue, the bonds without the warrants were selling for $1,007. The stock warrants had no readily determinable value. How much will be credited to Additional Paid-in Capital-Stock Warrants? Correct answer: 115,000. Just want to know how to calculate.

Thank you!!

Solutions

Expert Solution

Particulars	$	Reason
Cash paid of the compound instrument - bond with warrants at FV 1000	315,000	3000 bonds $1000($105/$1000)
Bond payable	300,000	3000 bonds $1000($100/$1000)
Market price of the warrant	4	Given
FMV of the warrant (3000*4)	240,000	$43000 bonds 20warrants
Market price of the bond with no warrant option	75,000	Balancing figure

ekkarill92 answered 5 months ago

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