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On February 1, 20x1, Bach Inc. issued $4,000,000, 10-year, 12% bonds for $4,080,000. Each $1,000...

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Accounting

On February 1, 20x1, Bach Inc. issued $4,000,000, 10-year, 12% bonds for $4,080,000. Each $1,000 bond had a detachable warrant for purchasing one share of Bachs $40 common stock for $62. Immediately after the bonds were issued, Bachs securities had the following market values:

Common stock, $40 par - $58

Warrant - 10

12% bond without warrant - 1,040 On July 15,

20x1, all stock warrants were exercised when the stock price was $75 per share.

Required: Prepare the journal entries to record the following (rounded to 2 decimal places):

(1) Issuance of bonds with stock warrants

(2) Exercise of stock warrants

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