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    Book Value Method

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    On July 1, 2004, an interest payment date, $60,000 of ABC Co. bonds were converted into 1,200 shares of ABC Co. common stock each having a par value of $45 and a market value of $54. There is $2,400 unamortized discount on the bonds. Using the book value method, Risen would record
    a. no change in paid-in capital in excess of par.
    b. a $3,600 increase in paid-in capital in excess of par.
    c. a $7,200 increase in paid-in capital in excess of par.
    d. a $4,800 increase in paid-in capital in excess of par.

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    Solution Summary

    The solution explains the entries when convertible bond is converted using the book value method

    $2.19

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