Question

Bondholders of Balm Co. converted their bonds into 90,000 shares of $5 par value common stock. In Balm's accounting records, the bonds had a par value of $775,000 and unamortized discount of $23,000 at the time of conversion. What amount of additional paid-in capital from the conversion should Balm record?

Answer 1

Answer:

additional paid-in capital amount is  $302000

Explanation:

given data

share = 90000

common stock = $5 par value

accounting records  par value = $775,000

discount = $23000

to find out

amount of additional paid-in capital

solution

we know here debit amount bond payable is $775000

and

credit amount is discount that is  $23000

and common stock par value that is = share × par value

common stock par value that is = 90000 × 5

common stock par value that is = 450000

so

additional paid-in capital amount is = bond payable - discount - common stock

additional paid-in capital amount is = 775000 - 23000 - 450000

additional paid-in capital amount is = $302000