During Year 3, investors in bonds of Kline Corporation exercised their option to convert their debt securities into shares of common stock.The entry made in the accounting records to record the conversion is as follows:
Bonds Payable ...................................3,000
Common Stock ....................................1,000
Additional Paid-in Capital ............................2,000
The transaction requires

Question

During Year 3, investors in bonds of Kline Corporation exercised their option to convert their debt securities into shares of common stock.The entry made in the accounting records to record the conversion is as follows: 
Bonds Payable ...................................3,000
Common Stock ....................................1,000
Additional Paid-in Capital ............................2,000
The transaction requires

Quizplus · Accepted Answer

The conversion of bonds into stock is a non-cash transaction that does not appear in the cash flow statement but should be disclosed in the notes to the financial statements or a supplementary schedule.

During Year 3, Investors in Bonds of Kline Corporation Exercised