What would have bee retained earnings for free company

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Problem 1: On June 30, 2002, Free Company had outstanding 8%, P1,000,000 face amount, 15-year bonds maturing on June 30 , 2009. Interest is payable on June 30 and December 31. The unamortized balance on June 30, 2002, in the bond discount and bond issue costs accounts were P35,000 and P10,000 respectively. Part employs the book value method to record the conversion of bonds into common stock. If all of Part's bonds payable had been converted into Part's common stock on November 30, 2002, the retained earnings would have been

Choices:

A. increased by P19,800,000

B. unchanged

Reference no: EM133009858

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