1. Barker Industries issued 3 000 $1,000 bonds at 105. Each bond contains 20 detachable stock...

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1. Barker Industries issued 3 000 $1,000 bonds at 105. Each bondcontains 20 detachable stock warrants that allow the bondholder topurchase a share of Barker's common stock for $50. Immediatelyafter the issue, the warrants were selling for $4 each and thebonds without the warrants were selling for $ 985. How much will becredited to Additional Paid-in Capital -Stock Warrants? (Roundintermediate calculations to four decimal places and your finalanswer to the nearest dollar.) Use the proportional method.Answer is $236, 619. Just want to know how tocalculate.

2. Harrison Corporation borrowed $ 33 000 from F&M Bank onJune 1 of the current year. The bank required 6% interest. Interestwill be paid when the nine-month note becomes due. What is theinterest expense for the current year? (Do not round intermediatecalculations. Only round your final answer to the nearestdollar.)

correct answer : $1155. Just want to know how tocalculate.

3. Neil Corporation issued 5,000 $1,000 bonds at 103. Each bondcontains 15 detachable stock warrants that allow the bondholder topurchase a share of Neil's common stock for $50. Immediately afterthe issue, the bonds without the warrants were selling for $1,007.The stock warrants had no readily determinable value. How much willbe credited to Additional Paid-in Capital-Stock Warrants?Correct answer: 115,000. Just want to know how tocalculate.

Thank you!!

Answer & Explanation Solved by verified expert
4.1 Ratings (646 Votes)

Particulars $ Reason
Cash paid of the compound instrument - bond with warrants at FV 1000                  315,000 3000 bonds *$1000*($105/$1000)
Bond payable                  300,000 3000 bonds *$1000*($100/$1000)
Market price of the warrant                              4 Given
FMV of the warrant (3000*4)                  240,000 $4*3000 bonds *20warrants  
Market price of the bond with no warrant option                    75,000 Balancing figure  

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