Arco, INC. issued $500,000 of 4%, 10 year convertible bonds at 102 on July 1, 2012. On July 1, 2017, bondholders converted all bonds to common stock when the market value of the stock was $40. Arco accounts for premium and discounts on a straight-line basis. Each $1,000 bond is convertible into 30 shares of Arco's $9 par value stock. What is the proper entry to record the conversion of the bonds?
Arco, INC. issued $500,000 of 4%, 10 year convertible bonds at 102 on July 1, 2012. On July 1, 2017, bondholders converted all bonds to common stock when the market value of the stock was $40. Arco accounts for premium and discounts on a straight-line basis. Each $1,000 bond is convertible into 30 shares of Arco's $9 par value stock. What is the proper entry to record the conversion of the bonds?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Arco, INC. issued $500,000 of 4%, 10 year convertible bonds at 102 on July 1, 2012. On July 1, 2017, bondholders converted all bonds to common stock when the market value of the stock was $40. Arco accounts for premium and discounts on a straight-line basis. Each $1,000 bond is convertible into 30 shares of Arco's $9 par value stock. What is the proper entry to record the conversion of the bonds?
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