Sweet Inc. has decided to raise additional capital by issuing $162,000 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 $136,850, and the value of the warrants in the market is $24,150. The bonds sold in the market at issuance for $145,500.(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.

Sweet Inc. has decided to raise additional capital by issuing $162,000 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 $136,850, and the value of the warrants in the market is $24,150. The bonds sold in the market at issuance for $145,500.(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.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 8P

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