Tamarisk Corporation has outstanding 2,100 $1,000 bonds, each convertible into 4

Question

Tamarisk Corporation has outstanding 2,100 $1,000 bonds, each convertible into 40 shares of $10 par value common stock. The bonds are converted on December 31, 2017, when the unamortized discount is $37,500 and the market price of the stock is $21 per share Record the conversion using the book value approach. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

Explanation / Answer

Bonds payable 2100000       Discount on Bonds payable 37500       Common Stock 840000 =2100*40*10       Paid in capital in excess of par-Common Stock 1222500

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