Question
Q1)Convertible bonds from Lehigh Corp., with a face value of $10,000,000, were converted into 106,000 shares of Lehigh common stock. The conversion occurred on an
Q1)Convertible bonds from Lehigh Corp., with a face value of $10,000,000, were converted into 106,000 shares of Lehigh common stock. The conversion occurred on an interest payment date, August 28, 2019, when $180,000 of unamortized premium remained on the bonds. Each share of common stock had a par value of $1 and a market value of $96 at the time of the conversion. Lehigh uses the book value method to account for the conversion and appropriately records the following journal entry
1)DR Bonds payable 10,000,000 DR Premium on bonds payable 180,000 CR Common stock 10,180,000
2)DR Bonds payable 10,000,000 CR Premium on bonds payable 180,000 CR Common stock 106,000 CR Additional paid-in capital 9,714,000
3)DR Bonds payable 10,000,000 DR Premium on bonds payable 180,000 CR Common stock 106,000 CR Additional paid-in capital 10,074,000
4)DR Bonds payable 10,176,000 CR Premium on bonds payable 180,000 CR Common stock 106,000 CR Additional paid-in capital 9,890,000
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