On April 1, 2018, Austere Corporation issued $300,000 of 10% bonds at 105. Each $1,000 bond was sold with 25 detachable stock warrants, each permitting the investor to purchase one share of common stock for $17. On that date, the market value of the common stock was $15 per share and the market value of each warrant was $2. Austere should record what amount of the proceeds from the bond issue as an increase in liabilities?

Question

Quizplus · Accepted Answer

300 × 25 = 7,500
7,500 × $2 = $15,000
$300,000 × 1.05 = $315,000
$315,000 - 15,000 = $300,000

On April 1, 2018, Austere Corporation Issued $300,000 of 10