Brief Exercise 164 Sarasota Corporation issued 2000 1000 bon

Brief Exercise 16-4 Sarasota 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 99, and the warrants had a market price of $48. Use the proportional method to record 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 O decimal places, e.g. 5,125.) Acceunt Titles and Exploati

Solution

Fair value of bonds (2,000 X $1,000 X .99) $1,980,000

Cash	2,020,000
Discount on bond payable	73,410		($2,000,000 - $1,926,590)
Bond Payable		2,000,000
Paid in Capital - Stock warrant		93,410
Fair value of bonds (2,000 X $1,000 X .99) $1,980,000
Fair value of warrants (2,000 X $48) 96,000
Equal
Aggregate fair value $2,076,000
Allocated to bonds [($1,980/$2,076) X $2,020,000] $1,926,590
Allocated to warrants [($96/$2,076) X $2,020,000] 93,410
2020000