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Convertible bonds outstanding

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Fogel Co. has $5,000,000 of 8% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2012, the holders of $1,600,000 bonds exercised the conversion privilege. On that date the market price of the bonds was 105 and the market price of the common stock was $36. The total unamortized bond premium at the date of conversion was $350,000. Fogel should record, as a result of this conversion, a _____.
Selected Answer:
[None Given]
Response Feedback:
$1,600,000 + ($350,000 × .32) - (1,600 × 30 × $30) = $272,000

i have arrived at the answer but need an explanation of where the .32 comes from.

Reference no: EM13338006

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