On July 1, 2014, an Interest Payment Date, $90,000 of Parks

question 88

Multiple Choice

On July 1, 2014, an interest payment date, $90,000 of Parks Co. bonds were converted into 1,800 shares of Parks Co. common stock each having a par value of $45 and a market value of $54. There is $3,600 unamortized discount on the bonds. Using the book value method, Parks would record

• A) no change in paid-in capital in excess of par.
• B) a $5,400 increase in paid-in capital in excess of par.
• C) a $10,800 increase in paid-in capital in excess of par.
• D) a $7,200 increase in paid-in capital in excess of par.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials and labor.

Sales

The total amount of goods or services sold by a company, contributing to its revenue.

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not affect future business decisions.