Toronto, Inc. issued 4,000 shares of $100 par preferred stock at $155 a share. Each share of stock has a warrant attached to it that allows the holder to purchase one share of $20 par value common stock at $50. Shortly after the preferred stock was issued, the stock sold for $150 ex-rights and the warrants sold for $10 each.
Required:
a. Prepare the journal entry to record the issuance of the preferred stock.
b. Prepare the journal entry to record the exercise of 2,200 of the warrants.
c. Prepare the journal entry to record the expiration of the remaining 1,800 warrants.

Question

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The Answer of Toronto, Inc. issued 4,000 shares of $100 par preferred stock at $155 a share. Each share of stock has a warrant attached to it that allows the holder to purchase one share of $20 par value common stock at $50. Shortly after the preferred stock was issued, the stock sold for $150 ex-rights and the warrants sold for $10 each.
Required:
a. Prepare the journal entry to record the issuance of the preferred stock.
b. Prepare the journal entry to record the exercise of 2,200 of the warrants.
c. Prepare the journal entry to record the expiration of the remaining 1,800 warrants.