On August 1, 2024, Gorczany Incorporated issued $11 million of 10-year, 10% bonds at 106. Each $1,000 bond was issued with 30 detachable stock warrants, each of whichentitled the bondholder to purchase, for $58, one share of Gorczany's no par common stock. On August 1, 2024, the market value of each warrant was $4.50By what amount should Gorczany's shareholders' equity increase when the bonds are issued?ABCDE$1,485,000$11,000$11,660,000$349,800$11,000,000 1

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By what amount should Gorczany's shareholders' equity increase when the bonds are issued

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 11QE

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Question

On August 1, 2024, Gorczany Incorporated issued $11 million of 10-year, 10% bonds at 106. Each $1,000 bond was issued with 30 detachable stock warrants, each of which
entitled the bondholder to purchase, for $58, one share of Gorczany's no par common stock. On August 1, 2024, the market value of each warrant was $4.50
By what amount should Gorczany's shareholders' equity increase when the bonds are issued?
A
B
C
D
E
$1,485,000
$11,000
$11,660,000
$349,800
$11,000,000 1

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