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What entry should be made

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Question - Metro Inc. has decided to raise additional capital by issuing $170,000 face value of bonds with a coupon rate of 10%. In discussions with their investment bankers, it was determined that to help the sale of bonds, detachable stock warrants should be issued at the rate of one warrant for each bond sold. The value of the bonds without the warrants is considered to be $136,000, and the value of the warrants in the market is $24,000. The bonds with stock warrants sold in the market at issuance for $152,000. Each stock warrant can purchase two shares of Metro's $2 par common stock at $40 per share.

1. What entry should be made at the time of the issuance of the bonds and warrants?

2. What entry should be made if all stock warrants are exercised when the stock price is $50 per share.

Reference no: EM133053945

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