Neil Corporation issued $5,000,000 of bonds at 103.Each bond contains 15 detachable stock warrants that allow the bondholder to purchase a share of Barker's common stock for $50.Immediately after the issue,the bonds without the warrants were selling for $1,010.The stock warrants had no readily determinable value.How much will be credited to Paid-in Capital-Stock Warrants?

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Quizplus · Accepted Answer

The bonds were issued at 103, meaning they were sold for 103% of their face value, which is $5,150,000. The bonds without the warrants were selling for $1,010 per bond, so the value of the bonds alone is $5,050,000. The difference between the issue price and the value of the bonds alone is $100,000, which is attributed to the stock warrants. Therefore, $100,000 will be credited to Paid-in Capital-Stock Warrants.

Neil Corporation Issued $5,000,000 of Bonds at 103