What amount should johannesburg credit to common shares

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Question 1: Johannesburg Corp. has two issues of securities outstanding: no par value common shares and 8% convertible bonds with a par value of $ 8,000,000. Bond interest payment dates are June 30 and December 31. The conversion clause in the bond indenture entitles the bondholders to receive 40 common shares in exchange for each $ 1,000 bond. The value of the equity portion of the bond issue is $ 60,000. On June 30, 2020, the holders of $ 1,200,000 par value bonds exercise the conversion privilege. The market price of the bonds on that date is $ 1,100 per bond and the market price of the common shares is $35. The total unamortized bond discount at the date of conversion is $ 500,000. In applying the book value method, what amount should Johannesburg credit to Common Shares as a result of this conversion?

a) $ 1,284,000
b) $ 1,134,000
c) $ 1,125,000
d) $ 1,116,000

Reference no: EM132873380

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