Thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 sh

Question

Thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is

Answer

Bonds Payable ......................................................................... 39,600
                   Common Stock ...............................................................           20,000
                   Paid-in Capital in Excess of Par..........................................           19,600

Bonds Payable ......................................................................... 30,000
        Premium on Bonds Payable ....................................................... 9,600
                   Common Stock ...............................................................           30,000
                   Paid-in Capital in Excess of Par .........................................             3,600

Bonds Payable ......................................................................... 30,000
        Premium on Bonds Payable ....................................................... 9,600
                   Common Stock ...............................................................           20,000
                   Paid-in Capital in Excess of Par..........................................           19,600

Bonds Payable ......................................................................... 39,600
                   Common Stock ...............................................................           36,000
                   Paid-in Capital in Excess of Par..........................................             3,600

Bonds Payable ......................................................................... 39,600
                   Common Stock ...............................................................           20,000
                   Paid-in Capital in Excess of Par..........................................           19,600

Bonds Payable ......................................................................... 30,000
        Premium on Bonds Payable ....................................................... 9,600
                   Common Stock ...............................................................           30,000
                   Paid-in Capital in Excess of Par .........................................             3,600

Bonds Payable ......................................................................... 30,000
        Premium on Bonds Payable ....................................................... 9,600
                   Common Stock ...............................................................           20,000
                   Paid-in Capital in Excess of Par..........................................           19,600

Bonds Payable ......................................................................... 39,600
                   Common Stock ...............................................................           36,000
                   Paid-in Capital in Excess of Par..........................................             3,600

Explanation / Answer

Bonds Payable ......................................................................... 30,000
        Premium on Bonds Payable ....................................................... 9,600
                   Common Stock ...............................................................           20,000
                   Paid-in Capital in Excess of Par..........................................           19,600

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