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Make the journal entry on august to record the issuance

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On August 1, 2021, National Corporation issued $200,000 of 8% bonds at 99. The bonds mature in 10 years. Each $1,000 bond was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $25, one share of National $5 par common stock. World Company purchased the entire bond issue. On August 2, 2021, the market value per share for National stock was $45 and the market value of each warrant was $6. On March 15, 2023, when National common stock had a market price of $70 per share, World Company exercised all the warrants it held.

Required:

Question 1: Prepare the journal entry on August 1, 2021 to record the issuance of the bonds with detachable warrants by National.

Question 2: Prepare the journal entry on March 15, 2023 to record the exercise of the warrants in the books of National.

Reference no: EM132828167

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