- This topic has 1 reply, 2 voices, and was last updated 9 years, 8 months ago by
.
-
Topic
-
On November 2, Year 1, Finsbury, Inc. issued warrants to its stockholders giving them the right to purchase additional $20 par value common shares at a price of $30. The stockholders exercised all warrants on March 1, Year 2. The shares had market prices of $33, $35, and $40 on November 2, Year 1, December 31, Year 1, and March 1, Year 2, respectively. What were the effects of the warrants on Finsbury’s additional paid-in capital and net income?
Additional Paid-in capital Net income
a.
Increased in Year 2
Decreased in
Year 1 and Year 2
b.
Increased in Year 1
No effect
c.
Increased in Year 2
No effect
d.
Increased in Year 1
Decreased in
Year 1 and Year 2
Answer: C
Explanation
Rule: That portion of proceeds in excess of stocks’ par value is credited to “additional paid-in-capital” at the time the rights are exercised.
Can someone please help me with the Journal entry when issued and exercised please?
Thanks
- You must be logged in to reply to this topic.
