Crane Co. has $3860000 of 8% convertible bonds outstanding. Each $1000 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, 2025, the holders of $1158000 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 $37. The total unamortized bond premium at the date of conversion was $270000. Crane should record, as a result of this conversion, a O credit of $196800 to Paid-in Capital in Excess of Par. O credit of $172200.00 to Paid-in Capital in Excess of Par. O loss of $11580. O credit of $86400 to Premium on Bonds Payable.
Crane Co. has $3860000 of 8% convertible bonds outstanding. Each $1000 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, 2025, the holders of $1158000 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 $37. The total unamortized bond premium at the date of conversion was $270000. Crane should record, as a result of this conversion, a O credit of $196800 to Paid-in Capital in Excess of Par. O credit of $172200.00 to Paid-in Capital in Excess of Par. O loss of $11580. O credit of $86400 to Premium on Bonds Payable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Crane Co. has $3860000 of 8% convertible bonds outstanding. Each $1000 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, 2025, the holders of $1158000 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 $37. The
total unamortized bond premium at the date of conversion was $270000. Crane should record, as a result of this conversion, a
credit of $196800 to Paid-in Capital in Excess of Par.
O credit of $172200.00 to Paid-in Capital in Excess of Par.
O loss of $11580.
O credit of $86400 to Premium on Bonds Payable.
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