On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Payne's common stock was $35 per share and of the warrants was $2. 2. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for a. $36,560. b. $36,720. c. $37,080. d. $65,000. 3. On May 1, 2014, Payne should record the bonds with a a. discount of $36,000. b. premium of $10,080. c. discount of $18,720. d. premium of $27,000.
On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for $40 one share of Payne's common stock, $15 par value, were attached to each $1,000 bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value of Payne's common stock was $35 per share and of the warrants was $2. 2. On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for a. $36,560. b. $36,720. c. $37,080. d. $65,000. 3. On May 1, 2014, Payne should record the bonds with a a. discount of $36,000. b. premium of $10,080. c. discount of $18,720. d. premium of $27,000.
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
Related questions
Question
please answer within the format by providing formula the detailed working
Please provide answer in text (Without image)
Please provide answer in text (Without image)
Please provide answer in text (Without image)
Transcribed Image Text:On May 1, 2014, Payne Co. issued $900,000 of 7% bonds at 102, which are due on
April 30, 2024. Twenty detachable stock warrants entitling the holder to purchase for
$40 one share of Payne's common stock, $15 par value, were attached to each $1,000
bond. The bonds without the warrants would sell at 96. On May 1, 2014, the fair value
of Payne's common stock was $35 per share and of the warrants was $2.
2.
3.
On May 1, 2014, Payne should credit Paid-in Capital from Stock Warrants for
a. $36,560.
b. $36,720.
c. $37,080.
d. $65,000.
On May 1, 2014, Payne should record the bonds with a
a. discount of $36,000.
b. premium of $10,080.
c. discount of $18,720.
d. premium of $27,000.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College