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# Amortized Bond Premium and Paid in Capital in Excess of Par

23. Jenks 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, 2007, 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. Jenks should record, as a result of this conversion, a
a. 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.

24. On July 1, 2007, an interest payment date, \$60,000 of Risen Co. bonds were converted into 1,200 shares of Risen 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.

#### Solution Preview

23. a. credit of \$136,000 to Paid-in Capital in Excess of Par.
The total unamortized bond premium is 175,000. The premium for \$800,000 of bonds is 175,000/2,500,000 X 800,000=56,000. The carrying value of the ...

#### Solution Summary

This solution provides calculations for the difference in paid in capital in excess of par to be credited.

\$2.19