Hoffman Corporation issued $60 million of 5%, 20-year bonds at 102. Each of the 60,000 bonds was issued with 10 detachable stock warrants, each of which entitled the bondholder to purchase, for $20, one share of $1 par common stock. At the time of sale, the market value of the common stock was $25 per share and the market value of each warrant was $5. Prepare the journal entry to record the issuance of the bonds.

Date   Account titles and Explanation             Debit             Credit

           Cash (60,000*102%)                            $61,200,000

           Discount on bonds payable                $1,800,000

            (63,000,000-61,200,000)

                   Bond payable (Face value)                                  $60,000,000

                   Equity stock warrants outstanding                      $3,000,000

                   (60,000 bonds * 10 warrants * $5)

               (To record the issue of shares and the share warrants)