On January 1, 2011, the $1,000,000 par value bonds of Gruden Company with a carrying value of

Question:

On January 1, 2011, the $1,000,000 bonds of Gruden Company with a carrying value of $1,000,000 are converted to 500,000 shares of $0.50 common stock. Record the entry for the conversion of the bonds.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...