On January 1, $300,000 of par value bonds with a carrying amount of $310,000 is converted to 50,000 $5 par value ordinary shares. The entry to record the conversion of the bonds includes all of the following entries except:

Question

Quizplus · Accepted Answer

The correct entry to record the conversion of bonds into shares includes debiting Bonds Payable for the par value of the bonds ($300,000, not $310,000), debiting Premium on Bonds Payable for the amount above par ($10,000), and crediting Share Capital and Share Premium for the appropriate amounts based on the shares issued.

On January 1, $300,000 of Par Value Bonds with a Carrying