Headland Inc. has decided to raise additional capital by issuing $191,000 face value of bonds with a coupon rate of 10%. 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 $144,000, and the value of the warrants in the market is $16,000. The bonds sold in the market at issuance for $140,000. (a) What entry should be made at the time of the issuance of the bonds and warrants? b1) Prepare the entry if the warrants were nondetachable
Headland Inc. has decided to raise additional capital by issuing $191,000 face value of bonds with a coupon rate of 10%. 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 $144,000, and the value of the warrants in the market is $16,000. The bonds sold in the market at issuance for $140,000. (a) What entry should be made at the time of the issuance of the bonds and warrants? b1) Prepare the entry if the warrants were nondetachable
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter20: Hybrid Financing: Preferred Stock, Warrants, And Convertibles
Section: Chapter Questions
Problem 1P: Neubert Enterprises recently issued $1,000 par value 15-year bonds with a 5% coupon paid annually...
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Headland Inc. has decided to raise additional capital by issuing $191,000 face
(a) What entry should be made at the time of the issuance of the bonds and warrants?
b1) Prepare the entry if the warrants were nondetachable
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