Carla Inc. has decided to raise additional capital by issuing $168,000 face valu
ID: 2552242 • Letter: C
Question
Carla Inc. has decided to raise additional capital by issuing $168,000 face value of bonds with a coupon rate of 9%. 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 $100 bond sold. The value of the bonds without the warrants is considered to be $154,800, and the value of the warrants in the market is $17,200. The bonds sold in the market at issuance for $154,000 (a) 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 O for the amounts. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to 0 decimal places, e.g. 5,125.) Account Titles and Explanation Debit CreditExplanation / Answer
a Cash 154000 Discount on bonds payable 29400 Bonds payable 168000 Paid in capital-Stock Warrants 15400 =154000/(154800+17200)*17200 b Cash 154000 Discount on bonds payable 14000 Bonds payable 168000