A Bond Issue of $50,000 with a Carrying Value of $49,000

question 26

Multiple Choice

A bond issue of $50,000 with a carrying value of $49,000 is converted into $10 par value common stock at the rate of fifty shares for each $1,000 bond.The entry to record the conversion of bonds would be:

• A)
• \(\begin{array}{ll}
• \text { Bonds Payable } & 50,000 \\
• \text { Loss on Retirement of Bonds } & 1,000 \\
• \quad \text { Unamortized Bond Discount } & & 1,000\\
• \text { Common Stock }&& 50,000
• \end{array}\)
• B)
• \(\begin{array}{ll}
• \text { Bonds Payable } & 50,000 \\
• \text { Common Stock } &&&25,000 \\
• \text { Additional Paid-In Capital } &&25,000
• \end{array}\)
• C)
• \(\begin{array}{l}
• \text { Bonds Payable } \quad 50,000\\
• \begin{array} { l c r }
• \text { Common Stock } && 25,000 \\
• \text { Additional Paid-In Capital } & 24,000 & \\
• \text { Unamortized Bond Discount } & & 1,000
• \end{array}
• \end{array}\)
• D)
• \(\begin{array} { l c c }
• \text { Bonds Payable } & 49,000 & \\
• \text { Unamortized Bond Discount } & 1,000 \\
• \quad \text { Common Stock } && { 25,000 } \\
• \quad \text { Additional Paid-In Capital } & 25,000
• \end{array}\)

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