Blossom Corporation had two issues of securities outstanding: $20 par value common stock and an 9% convertible bond issue in the face amount of $15550000. Interest payment dates of the bond issue are June 30th and December 31st. The conversion clause in the bond indenture entitles the bondholders to receive forty shares of common stock in exchange for each $1000 bond. On June 30, 2025, the holders of $2332500 face value bonds exercised the conversion privilege. The market price of the bonds on that date was $1300 per bond and the market price of the common stock was $35. The total unamortized bond discount at the date of conversion was $970000. In applying the book value method, what amount will Blossom credit to Paid - in Capital in Excess of Par as a result of this transaction?
Blossom Corporation had two issues of securities outstanding: $20 par value common stock and an 9% convertible bond issue in the face amount of $15550000. Interest payment dates of the bond issue are June 30th and December 31st. The conversion clause in the bond indenture entitles the bondholders to receive forty shares of common stock in exchange for each $1000 bond. On June 30, 2025, the holders of $2332500 face value bonds exercised the conversion privilege. The market price of the bonds on that date was $1300 per bond and the market price of the common stock was $35. The total unamortized bond discount at the date of conversion was $970000. In applying the book value method, what amount will Blossom credit to Paid - in Capital in Excess of Par as a result of this transaction?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Blossom Corporation had two issues of securities outstanding: $20 par value common stock and an 9% convertible bond
issue in the face amount of $15550000. Interest payment dates of the bond issue are June 30th and December 31st.
The conversion clause in the bond indenture entitles the bondholders to receive forty shares of common stock in
exchange for each $1000 bond. On June 30, 2025, the holders of $2332500 face value bonds exercised the conversion
privilege. The market price of the bonds on that date was $1300 per bond and the market price of the common stock
was $35. The total unamortized bond discount at the date of conversion was $970000. In applying the book value
method, what amount will Blossom credit to Paid - in Capital in Excess of Par as a result of this transaction?
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