Assume new shares are issued to fulfill the warrants

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On 01/01/16, a company issues 700 bonds with a face value of $1,000 each. $720,000 is raised from the issuance. Each bond has 3 detachable warrants to purchase common stock at $40/share with an expiration date of 12/31/17. It is estimated by an investment bank that the bond will have a fair value of 99.25% while each warrant has a $13.50 fair value. On 01/05/17, the market price of the stock is $45/share and has a par value of $1/share. At the time, 1,300 of the warrants are exercised (assume new shares are issued to fulfill the warrants). The remaining warrants will expire at the end of 2017.

Record: A) the issuance on 01/01/16 and B) exercised warrants on 01/05/17.

Reference no: EM131287960

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Assume new shares are issued to fulfill the warrants : On 01/01/16, a company issues 700 bonds with a face value of $1,000 each. $720,000 is raised from the issuance. Each bond has 3 detachable warrants to purchase common stock at $40/share with an expiration date of 12/31/17. At the time, 1,300 of the w..

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