On January 2, 2018, Weston, Inc. issued 5,000 bonds at $1,060 each. Each bond contains 20 detachable stock warrants, each of which gives the owner the right to purchase one share of Weston $5 par value common stock at $40. The current selling price of common stock is $30 per share. Weston bonds without stock warrants are currently selling for $1,025 and it has additional warrants on the market selling for $20.
Required:
1. Prepare the journal entry to record the sale of the bonds using the proportional method. Round percentages to four decimal places.
2. Prepare the journal entry to record the exercise of all warrants on October 8, 2019, when the market price of the stock was $50.

Question

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The Answer of On January 2, 2018, Weston, Inc. issued 5,000 bonds at $1,060 each. Each bond contains 20 detachable stock warrants, each of which gives the owner the right to purchase one share of Weston $5 par value common stock at $40. The current selling price of common stock is $30 per share. Weston bonds without stock warrants are currently selling for $1,025 and it has additional warrants on the market selling for $20.
Required:
1. Prepare the journal entry to record the sale of the bonds using the proportional method. Round percentages to four decimal places.
2. Prepare the journal entry to record the exercise of all warrants on October 8, 2019, when the market price of the stock was $50.