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.

Question

Quizplus · Accepted Answer

Bonds Payable $3,300,000 + Premium $890,000 = $4,190,000 reduction to liabilities
Common Stock $3,300,000 (330,000 × $10)+ Paid-in Capital in Excess of Par $890,000 = $4,190,000 increase to stockholders' equity

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