On December 31, Moss Co. issued $1,000,000 of 11% bonds at 109. Each $1,000 bond was issued with 50 detachable stock warrants, each of which entitled the bondholder to purchase one share of $5 par common stock for $25. Immediately after issuance, the market value of each warrant was $4. On December 31, what amount should Moss record as discount or premium on issuance of bonds?
a. $200,000 discount.
b. $90,000 premium.
c. $40,000 premium.
d. $110,000 discount.

correct option is d. $110,000 discount.

Explanation:

given data

issued = $1,000,000

bond = 11%

detachable stock warrants = 50

purchase one share = $5

common stock = $25

market value = $4

solution

we get here total no of database stock purchase warranty is = $1000 × 50

total no of database stock = $50000

and

total value of warrant = $50000 × 4

total value of warrant = $200000

and

net proceed is = $ 1000000 x 109% = $1090000

so remaining value is

remaining value = net issue proceed - warranty attached

remaining value =  $1090000 - $200000

remaining value =   $890000

so discount on bond is = $1000000 - $890000

discount on bond = $110000

so correct option is d. $110,000 discount.

hi there, i would say your answer is:

b. there is a fixed quantity of resources and technology available.

hope that : )

answer///supply is elastic, and demand is inelastic;