If Bonds with a Face Value of $200,000 Are Converted

question 182

Multiple Choice

If bonds with a face value of $200,000 are converted into common stock when the carrying value of the bonds is $155,000,the entry to record the conversion would include a debit to:

• A)Bonds Payable for $155,000.
• B)Bonds Payable for $200,000.
• C)Discount on Bonds Payable for $45,000.
• D)Cash for $45,000.

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Definitions:

Safety Inventory

A stock buffer maintained to mitigate risk of stockouts due to demand variability and supply chain uncertainties.

Lead Time

The duration between the initiation and completion of a process, such as the time from placing an order to its delivery.

Standard Deviation

A measure of the dispersion or variability within a set of data points, indicating how much variation exists from the average.

ESC (Expected Shortage per Cycle)

The average amount of inventory shortage anticipated during a single replenishment cycle in inventory management.