Immediately After the Last Interest Payment, Henderson Company Converted $3,000,000

question 200

Multiple Choice

Immediately after the last interest payment, Henderson Company converted $3,000,000 of its bonds into 300,000 shares of $10 par value common stock. The unamortized premium on the bonds at the date of the conversion was $870,000. As a result of this conversion:

• A) liabilities decreased by $3,870,000 and stockholders' equity increased by $3,000,000.
• B) liabilities decreased by $3,000,000 and stockholders' equity increased by $3,000,000.
• C) liabilities decreased by $3,870,000 and stockholders' equity increased by $3,870,000.
• D) liabilities decreased by $870,000 and stockholders' equity increased by $870,000.

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Definitions:

Relational

Pertaining to the establishment and maintenance of meaningful relationships between individuals or groups.

Horizontal Communication

The exchange of information between peers within the same level of an organization, facilitating collaboration and team coordination.

Staff

Refers to all the employees of an organization or a specific group within.

Coworkers

Individuals working together in the same organization, sharing responsibilities or projects.