1. In addition to their $20 par value common stock, Gorman Outerwear has issued $12,000,000 in 8% convertible bonds. The bonds pay interest on June 30 and December 31. On June 30, 2017, holders of $1,800,000 of the bonds exercised the conversion privilege, receiving 40 shares of stock for each $1,000 bond. On the date of conversion, the bond market price was $1,100, the common stock market price was $35, and the total unamortized bond discount was $750,000. If Gorman uses the book value method, what amount will they credit to the Paid-in Capital in Excess of Par account as a result of the conversion?

A : $ 120,000.

B : $ 1,080,000.

C : $ 540,000.

D : $ 247,500.

2. At December 31, 2017 Roland Company had 200,000 shares of common stock and 10,000 shares of 5%, $100 par value cumulative preferred stock outstanding. No dividends were declared on either the preferred or common stock in 2017 or 2018. On February 10, 2019, prior to the issuance of its financial statements for the year ended December 31, 2018, Roland declared a 100% stock dividend on its common stock. Net income for 2018 was $800,000. In its 2018 financial statements, Rolands 2018 earnings per common share should be which of the following?

A : $3.78

B : $3.56

C : $1.88

D : $1.11

3. On January 1, 2016, Lemus Electric issued 5,000 shares of $50 par value convertible preferred stock. The conversion option stated that each share of preferred stock could be exchanged for six shares of $10 common stock after January 1, 2017. At the time the preferred shares were issued, the preferred shares had a market value of $78 and the common shares had a market value of $32. On January 2, 2017, the preferred shares had a market value of $83 and the common shares had a market value of $36. If 20% of the preferred stockholders exercised their conversion option on January 1, 2017, what would Lemus record in their journal?

A : Common Stock 78,000

Convertible Preferred Stock 78,000

B : Common Stock 300,000

Retained Earnings 90,000

Convertible Preferred Stock 250,000

Paid-in Capital in Excess of ParPreferred Stock 140,000

C : Convertible Preferred Stock 50,000

Paid-in Capital in Excess of ParPreferred Stock 28,000

Common Stock 60,000

Paid-in Capital in Excess of ParCommon Stock 18,000

D : Convertible Preferred Stock 250,000

Paid-in Capital in Excess of ParPreferred Stock 140,000

Common Stock 300,000

Paid-in Capital in Excess of ParCommon Stock 90,000