Prepare the amortization table (as of the issuance date) and journal entries:
Bradley-Link issued a 10.6%, $100 million bond on 7/1/2009 at 110. Interest is paid semiannually on June 30 and December 31. Each $1,000 bond was issued with 30 detachable stock warrants, each of which entitles the holder to purchase one share of the company's no par common stock for $40, beginning 2017. On the issuance date, the common stocks were traded in the market at $40 per sharem and the fair value of the warrants was $2 per share. The bonds are callable at 102 beginning in 2019 before the maturity date on Dec 31, 2021.
Notes:
- On December 31, 2016, the balance sheet included the following note: 10.6% nonconertible bond (net of unamortized discount or premium) $101,600,000
- When the common stock price reached $60 on July 5, 2017, 50% of the warrants issued with 10.6% bonds were exercised
- Use straight-line amortiztion