Illiad Inc. has decided to raise additional capital by issuing 5179,200 face val
ID: 2423314 • Letter: I
Question
Illiad Inc. has decided to raise additional capital by issuing 5179,200 face value of bonds with a coupon rate of 12%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each S100 bond sold. The value of the bonds without the warrants is considered to be S135,040, and the value of the warrants in the market is 533,760. The bonds sold in the market at issuance for 5165,000. What entry should be made at the time of 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.) Prepare the entry if the warrants were nondetachable. (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.)Explanation / Answer
Particulars Amount (in $) a). Journal entry at the time of the issuance of the bonds and warrants Cash 179200.00 Bonds Payable 135040.00 Warrants 35840.00 Premium on Bonds Payable 8320.00 b). Journal entry if the bonds are nondetachable Cash 179200.00 Bonds Payable 135040.00 Premium on Bonds Payable 44160.00