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Make the journal entries for rey corporation on february

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Reference no: EM132683139

On January 1, 2020, Rey Corporation issued $100 million of 8% nonconvertible bonds at 104. The bonds are due on December 31, 2024 (5 years). Each $1,000 bond was issued with 5 detachable share warrants, each of which entitled the bondholder to purchase, for $40, one share of Rey Corporation's ordinary shares. Leia Co. purchased 30% of the bond issue. On January 1, 2020, the market value of the ordinary shares was $60 per share and the market value of each warrant was $13. On February 1, 2022, when Rey Corporation's ordinary shares had a market price of $70 per share, Leia Co. exercised the warrants it held.

Required:

Question 1. Prepare the journal entries on January 1, 2020, to record the issuance of the bonds by Rey Corporation.

Question 2. Prepare the journal entries for Rey Corporation on February 1, 2022, to record the exercise of the warrants by Leia Co.

Reference no: EM132683139

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