On August 1, 2009, Limbaugh Communications issued $30 million of 10% nonconvertible bonds at 104. The bonds are due on July 31, 2029. Each$1,000 bond was issued with 20 detachable stock warrants, each of which entitled the bondholder to purchase, for $60, one share of Limbaugh Communications’$10 par common stock. Interstate Containers purchased 20% of the bond issue. On August 1, 2009, the market value of the common stock was $58 per share and the market value of each warrant was$8.
In February, 2020, when Limbaugh’s common stock had a market price of $72 per share and the unamortized discount balance was$1 million, Interstate Containers exercised the warrants it held.
Prepare the journal entry for Limbaugh in February, 2020, to record the exercise of the warrants.