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On March 1, 2018, E Corp. issued $1,000,000 of 10% nonconvertible bonds at 103, due on...

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Accounting

On March 1, 2018, E Corp. issued $1,000,000 of 10%nonconvertible bonds at 103, due on February 28, 2028. Each $1,000bond was issued with 30 detachable stock warrants, each of whichentitled the holder to purchase, for $50, one share of Evan's $25par common stock. On March 1, 2018, the market price of eachwarrant was $4. By what amount should the bond issue proceedsincrease shareholders' equity?

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4.1 Ratings (839 Votes)

Total Par value of bond 1,000,000.00
Interest rate 10% Workings Total Par value of bond 1,000,000.00 A
Issue Price              103.00 No. Of warrants issued per $ 1000 bond                 30.00 B
No. Of warrants issued per $ 1000 bond                30.00 No of bonds of $1000 from total            1,000.00 C=A/1000
No. Of warrants issued
       30,000.00
D No. Of warrants issued         30,000.00 D=C*B
Market price of warrants                  4.00 E
Amount to be credited to shareholders equity      120,000.00 F=D*E

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