Homework SourseBlossom Corporation issued 2000 1000 bonds at 101 Each bond
Blossom Corporation issued 2,000 $1,000 bonds at 101. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 97, and the warrants had a market price of $33. Use the proportional method to record the issuance of the bonds and warrants.
Solution
In the books of Bloosom Corporation :
Bond issue proceeds proportionately allocated to bonds: $ 2,020,000 x 970 / (970 + 33) = $ 1,953,539.
Discount on bonds payable = $ 2,000,000 - $ 1,953,539 = $ 46,461
| Transaction | Account Titles | Debit | Credit |
| $ | $ | ||
| 1 | Cash ( 2,000 x 1,000 x 101 %) | 2,020,000 | |
| Discount on Bonds Payable | 46,461 | ||
| Bonds Payable | 2,000,000 | ||
| Paid-in Capital : Stock Warrants | 66,461 |
