Bridge Corporation Had Two Issues of Securities Outstanding-- Common Stock

question 43

Multiple Choice

Bridge Corporation 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 30,2014,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 Bridge credit to the account "Paid-In Capital in Excess of Par" as a result of this conversion assuming Bridge does not want to recognize any gain (or loss) on the conversion?

• A) $0
• B) $270,000
• C) $360,000
• D) $920,000

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Definitions:

Redundancies

Unnecessary repetitions in language or the elimination of positions or employees in a workforce.

"It Is" Structures

Grammatical constructions that use "it is" or "it's" to introduce a subject or emphasize a point.

Transitive Verb

A verb that requires one or more objects in a sentence to express a complete thought.

Transformed Predicate

A grammatical structure where the predicate of a sentence is modified or changed to alter the way information is conveyed.