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Record necessary adjusting journal entries ended december

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Reference no: EM132969662

On August 1st, Issued $3 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2041. Each $1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of no par common stock. The market value of the common stock was $58 per share and the market value of stock warrant was $8.

Cash debited for 3,120,000
Discount on bonds debited for 360,000
Bonds payable credited for 3,000,000
Stock warrant credited for 480,000

December 31st- The company recognizes accrued interest for the bonds issued on August 1st. The company uses straight method for the bond issued on August 1st. The fair value of the shares is $5,200,000.

Problem 1: Use the given information to record the necessary adjusting journal entries ended December 31st

Reference no: EM132969662

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