Ask Question
6 October, 08:18

On January 1, the $3,000,000 par value bonds of Spitz Company with a carrying value of $3,000,000 are converted to 1,000,000 shares of $1 par value common stock. Record the entry for the conversion of the bonds.

+4
Answers (1)
  1. 6 October, 08:22
    0
    Dr bonds payable $3,000,000

    Cr common stock $1,000,000

    Cr paid in capital in excess of par val.-common stock ($3m-$1m) $2,000,000

    Explanation:

    The conversion means that the bonds payable account is debited since the obligation has now been settled by a way of giving common stock in lieu.

    The credit entries would comprise of par value of the conversion which is $1 par value multiplied by number of common stock of 1,000,000 which gives $1,000,000 while the remaining balance is credited to paid-in capital in excess-common stock
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “On January 1, the $3,000,000 par value bonds of Spitz Company with a carrying value of $3,000,000 are converted to 1,000,000 shares of $1 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers