Exhibit 14-8 Yoho Corp. issued $500,000 of its ten-year 6% bonds at 104. Each $1,000 bond carries ten warrants. Each warrant allows the holder to purchase one share of $10 par common stock for $50. Following the sale, relevant market values were:
-Refer to Exhibit 14-8. The entry to record the exercise of 1,500 warrants would include a
A) debit to Cash for $15,000
B) debit to Common Stock for $15,000
C) credit to Additional Paid-in Capital on Common Stock for $79,500
D) debit to Common Stock Warrants for $15,000

Question

Exhibit 14-8 Yoho Corp. issued $500,000 of its ten-year 6% bonds at 104. Each $1,000 bond carries ten warrants. Each warrant allows the holder to purchase one share of $10 par common stock for $50. Following the sale, relevant market values were:  
-Refer to Exhibit 14-8. The entry to record the exercise of 1,500 warrants would include a
A) debit to Cash for $15,000 
B) debit to Common Stock for $15,000 
C) credit to Additional Paid-in Capital on Common Stock for $79,500 
D) debit to Common Stock Warrants for $15,000

Quizplus · Accepted Answer

The exercise of warrants results in the issuance of common stock, which increases the Common Stock account. The payment received for the warrants increases the Additional Paid-in Capital on Common Stock account.