On June 30, 2009, Blair Industries had outstanding $80 million of 8%, convertible bonds that mature on June 30, 2010. Interest is payable each year on June 30 and December 31. The bonds are convertible into 6 million shares of $10 par common stock. At June 30, 2009, the unamortized balance in the discount on bonds payable account was $4 million. On June 30, 2009, half the bonds were converted when Blair's common stock had a market price of $30 per share. When recording the conversion, Blair should credit paid-in capital-excess of par:

Question

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The conversion involves converting $40 million of bonds into 3 million shares. The book value of the bonds converted is $36 million ($40 million face value - $2 million unamortized discount). The par value of the shares issued is $30 million (3 million shares x $10 par value). The excess of the book value over the par value is $6 million, which is credited to paid-in capital-excess of par.

On June 30, 2009, Blair Industries Had Outstanding $80 Million