On December 31, 2019, Dare Corporation had outstanding 8%, $2,000,000face value convertible bonds maturing on December 31, 2023. Interest ispayable annually on December 31. Each $1,000 bond is convertible into60 shares of Dare's $10 par value common stock. On January 2, 2021,when the Premium on Bonds Payable account balance was $45,000, anindividual holding 200 of the bonds exercised the conversion privilegewhen the market value of Dare's common stock was $18 per share. Usingthe book value method, Dare's entry to record the conversion shouldinclude a credit to Additional Paid-in Capital of:a. $80,000b. $84,500c. $96,000d. $125,000
On December 31, 2019, Dare Corporation had outstanding 8%, $2,000,000face value convertible bonds maturing on December 31, 2023. Interest ispayable annually on December 31. Each $1,000 bond is convertible into60 shares of Dare's $10 par value common stock. On January 2, 2021,when the Premium on Bonds Payable account balance was $45,000, anindividual holding 200 of the bonds exercised the conversion privilegewhen the market value of Dare's common stock was $18 per share. Usingthe book value method, Dare's entry to record the conversion shouldinclude a credit to Additional Paid-in Capital of:a. $80,000b. $84,500c. $96,000d. $125,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter15: Contributed Capital
Section: Chapter Questions
Problem 5MC
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Question
On December 31, 2019, Dare Corporation had outstanding 8%, $2,000,000
face
payable annually on December 31. Each $1,000 bond is convertible into
60 shares of Dare's $10 par value common stock. On January 2, 2021,
when the Premium on Bonds Payable account balance was $45,000, an
individual holding 200 of the bonds exercised the conversion privilege
when the market value of Dare's common stock was $18 per share. Using
the book value method, Dare's entry to record the conversion should
include a credit to Additional Paid-in Capital of:
a. $80,000
b. $84,500
c. $96,000
d. $125,000
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