When bonds are converted into common stock
A) the market price of the stock on the date of conversion is credited to the Common Stock account.
B) the market price of the bonds on the date of conversion is credited to the Common Stock account.
C) the market price of the stock and the bonds is ignored when recording the conversion.
D) gains or losses on the conversion are recognized.

Question

Quizplus · Accepted Answer

When bonds are converted into common stock, the market price of the stock and the bonds is ignored. The book value of the bonds is transferred to the common stock and additional paid-in capital accounts, without recognizing any gain or loss.

When Bonds Are Converted into Common Stock