On December 31, 2019, Dare Corporation had outstanding 8%, $2,000,000 face value convertible bonds maturing on December

Question:

On December 31, 2019, Dare Corporation had outstanding 8%, $2,000,000 face value convertible bonds maturing on December 31, 2023. Interest is 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

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...

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