Immediately After the Last Interest Payment,Henry Company Converted $3,300,000 of Its

question 19

Multiple Choice

Immediately after the last interest payment,Henry Company converted $3,300,000 of its bonds into 330,000 shares of $10 par value common stock.The unamortized premium on the bonds at the date of the conversion was $890,000.As a result of this conversion:

• A)liabilities decreased by $4,190,000 and stockholders' equity decreased by $4,190,000.
• B)liabilities decreased by $3,300,000 and stockholders' equity increased by $3,300,000.
• C)liabilities decreased by $4,190,000 and stockholders' equity increased by $4,190,000.
• D)liabilities decreased by $890,000 and stockholders' equity increased by $890,000.

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Definitions:

Production Costs

The total costs involved in the production of goods, including materials, labor, and overhead expenses.

Manufacturing Overhead Budget

A financial plan that estimates the costs associated with the production process apart from direct labor and materials.

Production Costs

The total expenses incurred in manufacturing a product, including raw materials, labor, and overhead costs.

Disbursements Section

Part of financial statements or reports that details the outflow of cash or cash equivalents, often within the context of operating, investing, and financing activities.