A company has $450,000 in bonds payable with an unamortized discount of $10,500.If two-thirds of the bonds are converted to common stock,the carrying value of the bonds payable will decrease by
A)$146,500.
B)$293,000.
C)$307,000.
D)$314,000.

Question

Quizplus · Accepted Answer

The carrying value of the bonds payable is $450,000 - $10,500 = $439,500.

If two-thirds of the bonds are converted to common stock, then the remaining one-third of the bonds will still have a carrying value of (1/3)*$439,500 = $146,500.

Therefore, the carrying value of the bonds payable will decrease by $439,500 - $146,500 = $293,000.

Hence, the correct answer is (B) $293,000.

A Company Has $450,000 in Bonds Payable with an Unamortized