when outstanding bonds are converted into common stock, under either the book value method or the market value method, the same amount would be debited to: bonds payable bond premium a. yes yes b. no yes c. no no d. yes no

Bond is a type of debt security that companies, governments, and other entities issue to raise capital. When a bond is issued, the issuer is essentially borrowing money from bondholders and promising to repay the principal amount at a predetermined interest rate and maturity date. Bonds are typically issued with maturities of one year or more, but can range anywhere from a few days to 30 years. Bondholders typically receive regular interest payments on their investments until the bond matures and the principal is repaid. Bonds are considered to be a safer investment than stocks, as they provide a steady stream of income and are less prone to price fluctuations.

When outstanding bonds are converted into common stock, the amount debited is the book value of the bonds converted. The book value is calculated by subtracting the bond premium from the bonds’ face value. The market value of the bonds is not used in the conversion process.

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