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What is the amount that should be credited to paid

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Butler Company issued $600,000 face value convertible bonds for $578,400 on September 1, 2017.

  • Each $1,000 bond is convertible into 30 shares of Butler's $5 par value common stock beginning on September 1, 2021.
  • On September 1, 2021, holders of 100 bonds converted their bonds into the company's common stock.
  • The market value of the common stock on the day of conversion was $36 per share, and the unamortized discount related to all 600 bonds on the same date was $15,000.

Problem 1. On September 1, 2021, what is the amount that should be credited to paid in capital-bond conversion, assuming Butler used the book value method?

Problem 2. On September 1, 2021, what is the amount that should be debited to loss from bond conversion, assuming the bond conversion was accounted for using the market value method?

Reference no: EM132927976

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