Answered

Explore Westonci.ca, the premier Q&A site that helps you find precise answers to your questions, no matter the topic. Join our platform to connect with experts ready to provide precise answers to your questions in different areas. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

Fogel Co. has $2,500,000 of 8% convertible bonds outstanding. Each $1,000 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, 2010, the holders of $800,000 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 $36. The total unamortized bond premium at the date of conversion was $175,000. Fogel should record, as a result of this conversion, aa. credit of $136,000 to Paid-in Capital in Excess of Par.b. credit of $120,000 to Paid-in Capital in Excess of Par.c. credit of $56,000 to Premium on Bonds Payable.d. loss of $8,000.

Sagot :

abiolataiwo2015

Answer:

a. credit of $136,000 to Paid-in Capital in Excess of Par

Explanation:

Based on the information given Fogel should record, as a result of this conversion, a CREDIT of the amount of $136,000 to Paid-in Capital in Excess of Par which is calculated as:

Paid-in Capital in Excess of Par=800,000 + ($175,000 × .32) – (800 × 30 × $30)

Paid-in Capital in Excess of Par= $136,000

Fogel should record the conversion as A. credit of $136,000 to Paid-in Capital in Excess of Par.

Based on the information that was given, the paid in capital in excess of par will be calculated thus:

= $800000 + ($175000 × 0.32) - (800 × 30 × 30)

= $136000

Therefore, from the calculation above, the recording will be a credit of $136,000 to Paid-in Capital in Excess of Par.

Read related link on:

https://brainly.com/question/22689522

We hope this information was helpful. Feel free to return anytime for more answers to your questions and concerns. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Westonci.ca is here to provide the answers you seek. Return often for more expert solutions.