Business, 22.05.2020 06:01 Morehollie7229
A Company issued a bond payable with detachable warrants on January 1, 20X1 as follows.
Bond payable ($1,000 par value; 400 bonds) $400,000
Coupon rate 4.70%
Bond issue price $414,000
Fair value of the bonds after issuance $390,000
Term 10 years
Number of detachable warrants per bond 50
Fair value of the warrants after issuance $2.00
Stock purchase price $15.00
Warrants exercised 5,000
Required:
1 warrant = 1 share of $1 par value stock
1) What is the interest expense in 20X1?
2) What is the credit to additional paid in capital at the time the warrants are exercised on June 30, 20X1?
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A Company issued a bond payable with detachable warrants on January 1, 20X1 as follows.
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