Please show steps On July 1, Salem Corporation issued $1,800,000 of 7% bonds...
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On July 1, Salem Corporation issued $1,800,000 of 7% bonds due in 10 years. The bonds pay cash interest semiannually. Each $1,000 bond includes a detachable stock purchase warrant. Each warrant gives the bondholder the right to purchase, for $30, one share of $1 par value common stock at any time during the next 10 years. The bonds were sold at 101. The value of the stock purchase warrants at the time of issuance was $90,000. The bonds would sell without warrants at $ $1,746,000. a. Record the entry for issuance of bonds using the proportional method. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Debit Credit 0 1,818,000 71,082 0 x Date Account Name July 1 Cash Discount on Bonds Payable Bonds Payable Paid-in Capital in Excess of Par-Common Stock To record bond issuance. 0 1,800,000 89,991 x 0 b. Record the entry for issuance of bonds assuming instead that the warrants are not detachable. Date Account Name Debit Credit July 1 Cash 1,818,000 0 0 Bonds Payable Premium on Bonds Payable To record bond issuance. 1,800,000 18,000 0
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