On January 1, 2016, Cooper Corporation issued $800,000 of 12.5% bonds due January 1, 2023, at 101. The bonds pay interest semiannually on June 30 and December 31. Each $1,000 bond carried 10 warrants which allowed the acquired to exchange 1 share of $10 par common stock for $50. Some time after the bonds were issued the bonds were quoted at 98 ex rights and each individual warrant was quoted at $5. Subsequently, on April 30, 2017, 2,000 rights were exercised.
Required:
1. Prepare the journal entry to record the bond issue.
2. Prepare the journal entries on April 30, 2017, to record the exchange of the warrants for common shares.

Question

Quizplus · Accepted Answer

The Answer of On January 1, 2016, Cooper Corporation issued $800,000 of 12.5% bonds due January 1, 2023, at 101. The bonds pay interest semiannually on June 30 and December 31. Each $1,000 bond carried 10 warrants which allowed the acquired to exchange 1 share of $10 par common stock for $50. Some time after the bonds were issued the bonds were quoted at 98 ex rights and each individual warrant was quoted at $5. Subsequently, on April 30, 2017, 2,000 rights were exercised.
Required:
1. Prepare the journal entry to record the bond issue.
2. Prepare the journal entries on April 30, 2017, to record the exchange of the warrants for common shares.

On January 1, 2016, Cooper Corporation Issued $800,000 of 12