Reference no: EM132894582
Question 1 - A company has $3,000,000 of 8% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value common stock. The bonds pay interest on January 31 and July 31. On July 31, 2014, the holders of $960,000 bonds exercised the conversion privilege. On that date the market price of the bonds was 105 and the market price of the common stock was $36. The total unamortized bond premium at the date of conversion was $210,000. The company should record, as a result of this conversion, a
-credit of $163,200 to Paid-in Capital in Excess of Par.
-credit of $67,200 to Premium on Bonds Payable.
-loss of $9,600.
-credit of $144,000 to Paid-in Capital in Excess of Par.
-none of these answers are correct
Question 2 - On January 1, 2015, a company had 250,000 shares of its $2 par value common stock outstanding. On March 1, the company sold an additional 500,000 shares on the open market at $20 per share. The company issued a 20% stock dividend on May 1. On August 1, the company purchased 280,000 shares and immediately retired the stock. On November 1, 400,000 shares were sold for $25 per share. What is the weighted-average number of shares outstanding for 2015?
-477,777
-344,444
-750,000
-1,020,000
-none of these answers are correct
Question 3 - Companies routinely issue convertible bonds to investors. From an accounting standpoint, the conversion of bonds is most commonly recorded by the
-proportional method
-conversion value method
-market value method
-incremental method
-none of these answers are correct
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