On April 1, 2015, Windel Corporation issued bonds with detachable warrants. Information related to these bonds is shown below:

Face value of bonds

$325,000

Stated rate of interest

10%

Bonds issued at

103

Each $1,000 bond was sold with

30

detachable warrants

Each warrant allowed the investor to purchase one share of common stock for

$19

The par value of the common stock is

$4

On April 1, 2015 the market values were:

Common stock

$12

Warrants

$4

In February 2020, when Windel's common stock had a market price of $30 per share, one-third of the warrants were exercised.

Required:

a. Prepare the journal entry for the issuance of the bonds with the detachable warrants.

b. Prepare the journal entry to record the exercise of the warrants.