E16 - 1 1FINANCE ( Conversion of Bonds ) Vargo Limited had $ 2. 4 million of bonds payable outstanding and the unamortized premium for these bonds amounted to $ 4 4 , 500 . Each $ 1, 000 bond was convertible into 20 preferred shares . All bonds were then converted into preferred shares . The Contributed Surplus - Conversion Rights account had a balance of $ 2 2 , 200. Assume that the company follows IF RS