On January 1, 2013, the $2,000,000 par value bonds of Spitz Company with a carrying value of

Question:

On January 1, 2013, the $2,000,000 bonds of Spitz Company with a carrying value of $ 2,000,000 are converted to 1,000,000 shares of $1.00 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,...