If bonds with a face value of $140000 are converted into common stock when the carrying value of the bonds is $135000 the entry to record the conversion will include a debit to
A) Bonds Payable for $140000.
B) Bonds Payable for $135000.
C) Discount on Bonds Payable for $5000.
D) Bonds Payable equal to the market price of the bonds on the date of conversion.

Question

Quizplus · Accepted Answer

When bonds are converted into common stock, the entry to record the conversion includes debiting Bonds Payable for the face value of the bonds, which is $140,000 in this case, regardless of their carrying value or market price at the time of conversion.

If Bonds with a Face Value of $140000 Are Converted