What will happen to the retained earnings

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Problem 1: Paula employs the book value method to record the conversion of bonds into common stock. If all of Paula's bonds payable had been converted into Paula's common stock on November 30, 2002, what will happen to the retained earnings?

Option 1: increased by $13,800,000

Option 2: reduced by $4,200,000

Option 3: increased by $19,800,000

Option 4: unchanged

Reference no: EM133009846

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