Bonds with a maturity value of $200,000 and a an unamortized discount of $5,000 are converted into common shares.The entry will include a:

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When bonds are converted into common shares, the company no longer has a liability for the bonds payable, so the original discount account is no longer needed. Instead, the discount is transferred to additional paid-in capital in the equity section. Therefore, there is no need to make any entry related to the discount on bonds payable. The entry will simply credit the common shares account for the face value of the bonds converted, which is $200,000, and debit any account that needs to be credited for the same amount, such as Bonds Payable or a separate account named Convertible Bonds. The unamortized discount of $5,000 will be transferred to additional paid-in capital as part of the entry to credit the common shares account.

Bonds with a Maturity Value of $200,000 and a an Unamortized