Great Peaks, Inc

question 145

Multiple Choice

Great Peaks, Inc., has $3,600,000 of bonds outstanding with an unamortized discount of $160,000 immediately following the last interest payment. At that time, the bonds were converted into $350,000 shares of $10 par common stock. As a result of this conversion:

• A)liabilities decreased by $3,600,000 and stockholders' equity increased by $3,600,000.
• B)liabilities decreased by $3,440,000 and stockholders' equity increased by $3,600,000.
• C)liabilities decreased by $3,440,000 and stockholders' equity increased by $3,440,000.
• D)liabilities decreased by $3,600,000 and stockholders' equity increased by $3,400,000.

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