2A Eisler Corporation issued 2,490 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at 99, and the warrants had a market price of $44.Use the proportional method to record the issuance of the bonds and warrants.
2B. Eisler Corporation issued 2,560 $1,500 bonds at 102. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling separately at 98. The market price of the warrants without the bonds cannot be determined. Use the incremental method to record the issuance of the bonds and warrants.
2C. Eiser Inc. has decided to raise additional capital by issuing $176,400 face value of bonds with a coupon rate of 11%. In discussions with investment bankers, it was determined that to help the sale of the bonds, detachable stock warrants should be issued at the rate of one warrant for each $100 bond sold. The value of the bonds without the warrants is considered to be $140,250, and the value of the warrants in the market is $24,750. The bonds sold in the market at issuance for $161,500.(a) What entry should be made at the time of the issuance of the bonds and warrants?(b) Prepare the entry if the warrants were nondetachable.
2D. On May 1, 2014, Friendly Company issued 3,220 $1,000 bonds at 102. Each bond was issued with one detachable stock warrant. Shortly after issuance, the bonds were selling at 97, but the fair value of the warrants cannot be determined.(a) Prepare the entry to record the issuance of the bonds and warrants. (b) Assume the same facts as part (a), except that the warrants had a fair value of $22. Prepare the entry to record the issuance of the bonds and warrants.