Conversion of the bonds problem

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Reference no: EM13145226

Darby Corporation issued at a premium of $5,000 a $100,000 bond issue convertible into 2,000 shares of common stock (par value $40). At the time of the conversion, the unamortized premium is $2,000, the market value of the bonds is $110,000, and the stock is quoted on the market at $60 per share. If the bonds are converted into common, what is the amount of paid-in capital in excess of par to be recorded on the conversion of the bonds?

a. $25,000

b. $22,000

c. $32,000

d. $40,000

Reference no: EM13145226

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