Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on august 1, 2021, limbaugh communications issued

On August 1, 2021, Limbaugh Communications issued $22 million of 11% nonconvertible bonds at 105....

80.2K

Verified Solution

Question

Accounting

On August 1, 2021, Limbaugh Communications issued $22 million of 11% nonconvertible bonds at 105. The bonds are due on July 31, 2041. Each $1,000 bond was issued with 40 detachable stock warrants, each of which entitled the bondholder to purchase, for $50, one share of Limbaugh Communications no par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2021, the market value of the common stock was $48 per share and the market value of each warrant was $10. In February 2032, when Limbaughs common stock had a market price of $62 per share and the unamortized discount balance was $2 million, Interstate Containers exercised the warrants it held.

Required: 1. Prepare the journal entries on August 1, 2021, to record (a) the issuance of the bonds by Limbaugh and (b) the investment by Interstate. 2. Prepare the journal entries for both Limbaugh and Interstate in February 2032, to record the exercise of the warrants.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

Take a look at this new companies projected cash flow statement. Analyze and describe the health...

Accounting
1.2K views

Write a high-impact headline for linkedIn..... plzz ans asap...

Statistics
1.2K views

The National Sleep Foundation surveyed representative samples of adults in six different countries to ask questions...

Physics
1.2K views

Why are the following statements false? The potential energy of a system of interacting particles equals the...

Mechanical Engineering
1.2K views

A simple air cooled system is used for an aeroplane to take a load of 10...

Biology
1.2K views

c shipworms and zebra mussels d octopus and squids 2 All molluses have a similar...

Geometry
1.2K views

QUESTION 8 Use symmetry to graph the polar curve an r 6sin 50 Rose 5...

Statistics
1.2K views

3 Rowen conducts a survey to record the number of movies bought by each customer...

Statistics
1.2K views

The random number generator on calculators randomly generates a number between 0 and 1 The...

Calculus
1.2K views

Consider the function f x 3 6x The absolute maximum value is and this occurs...

Accounting
1.2K views

Mike's gross yearly income is $92,243. He is single with no children, and his tax...

Accounting
1.2K views

Elf Company is a successful producer of electronic parts. The company has 2 million 10%,...