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Business, 11.05.2021 02:30 misslux

The below information will be used for the next two questions. A Company issued a bond payable with detachable warrants on the interest payment date as follows.

Bond payable ($1,000 par value; 400 bonds) $400,000

Coupon rate 4.70%

Bond issue price $414,000

Fair value of the bonds after issuance $390,000

Term 10 years

Number of detachable warrants per bond 50

Fair value of the warrants after issuance $2.00

Stock purchase price $15.00

Warrants exercised 5,000

1 warrant = 1 share of $1 par value stock

1. What is interest expense in 20X1?

2. 1 warrant = 1 share of $1 par value stock

What is the credit to additional paid in capital at the time the warrants are exercised on June 30, 20X1?

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