Question

Grouper Corporation has outstanding 1,900 $1,000 bonds, each convertible into 60 shares of $10 par value common stock. The bonds are converted on December 31, 2017, when the unamortized discount is $37,000 and the market price of the stock is $21 per share. Record the conversion using the book value approach. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Step-by-step explanation:

The journal entries are shown below:

1. Bonds payable A/c Dr $1,900,000 (1,900 × $1,000)

To Discount on bonds payable $37,000

To Common stock $1,140,000 ($10 × 60 shares × 1,900)

To Additional paid-in capital in excess of par $723,000

(Being the conversion of bonds is recorded and the remaining balance is credited to the Additional paid-in capital in excess of par)