Gain or loss on the conversion

Reference no: EM13156793

A Company had two issues of securities outstanding-- common stock and a 5 percent convertible bond issue in the face amount of $10,000,000. Interest payment dates of the bond issue are June 30 and December 31. The conversion clause in the bond indenture entitles the bondholders to receive 40 shares of $20 par value common stock in exchange for each $1,000 bond. On June 30, 2011, the holders of $1,800,000 face value bonds exercised the conversion privilege. The market price of the bonds on that date was $1,100 per bond and the market price of the common stock was $35. The total unamortized bond discount at the date of conversion was $500,000. What amount should Madison credit to the account "Paid-In Capital in Excess of Par" as a result of this conversion assuming Madison does not want to recognize any gain (or loss) on the conversion?

A) $0

B) $270,000

C) $360,000

D) $920,000

Reference no: EM13156793

Questions Cloud

Online learning : I have a research argument paper which talk about " Online learning", I agree the Online learning, I do not know how to write a strong and clear thesis statement and introduction.

Record as the cost of goods : Jag Co. purchased goods with a list price of $150,000, subject to trade discounts of 20% and 10% with no cash discounts allowable. How much should Jag Co. record as the cost of these goods?

Describe the classroom environments : How are the student grouped? What is on the walls, ceiling, etc.? What equipment is available? Other elements? The environment in the classroom I observed in is different than I had observed at before.

Probability that individual-s pressure will be given range : If an individual is selected, find the probability that the individual's pressure will be between 120 and 121.8 mm Hg. Why is the answer to Part a so much smaller than the answer to Part b?

Gain or loss on the conversion : The total unamortized bond discount at the date of conversion was $500,000. What amount should Madison credit to the account "Paid-In Capital in Excess of Par" as a result of this conversion assuming Madison does not want to recognize any gain (or..

What output level should you operate to maximize profit : what output level should you operate to maximize profit? What price should you charge? How much will the industry as a whole produce?

Explain at least four possible factors which may influence : Descibe at least four possible factors which may influence the amount of light absorbed by a solution and how these factors may affect the absorption

What benefits are derived from this application : Research how a SPECIFIC biotechnology application within the above GENERAL examples (or ones not listed above) is used today. Example: Insulin production in bacteria is an example under the general topic of recombinant organisms.

Find probability that he or she prefers light beer : if a white-collar worker is chosen at random from this group, what is the probability that he or she prefers light beer (to reg. beer or none at all)?

User Account

All Pages