1. On January 2, A Company issued 4-year convertible bonds at 94. One year later these bonds were all converted into preferred stock. At conversion, the market price of the $10 par value preferred stock was $150. On the date of issuance, cash proceeds from the convertible bonds should be reported as

a. additional paid-in capital for the portion attributable to the conversion feature and as a liability for the balance

b. a liability for the bond.

c. a liability for the face amount of the bonds and additional paid-in capital for the discount on the face amount.

d. additional paid-in capital for the entire amount.

2. The conversion of bonds is most commonly recorded by the

a.incremental method.

b.proportional method.

c.market value method.

d.book value method.

3. A Company issued 15,000 shares of $100 par value convertible preferred stock for $204 per share. One share of preferred can be converted into 2 shares of the companys $2 par value common stock at the option of the preferred stockholder. At a later date all of the preferred was converted into common. The market value of the common stock on the date of the conversion was $120 per share. Applying the book value method, what total amount should be credited to the account, Additional paid-in capital-common stock as a result of the conversion of the preferred stock into common stock?

a.$3,000,000.

b.$3,060,000.

c.$3,540,000.

d.$3,600,000.