Metlock Inc. has decided to raise additional capital by issuing $184,000 face value of bonds with a coupon rate of 9%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $144,900, and the value of the warrants in the market is $16,100. The bonds sold in the market at issuance for $144,500.
(a) What entry should be made at the time of the issuance of the bonds and warrants?
(b) Prepare the entry if the warrants were nondetachable.
Answers: 3
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Metlock Inc. has decided to raise additional capital by issuing $184,000 face value of bonds with a...
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