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:

HR Arbitration

A dispute resolution process involving a neutral third party, used in human resources to settle conflicts between employees and employers.

Outsourcing

The practice of hiring outside firms to handle work normally performed within a company, often to cut costs.

Consulting

The practice of giving expert advice within a particular field, often involving identifying problems and recommending solutions.

Outsiders

Individuals who are not part of a specific group, organization, or community, often lacking the specific knowledge or experiences of that group.