On July 1, 2008 the Tuttle Company had bonds payable outstanding with a face value of $200,000

Question:

On July 1, 2008 the Tuttle Company had bonds payable outstanding with a face value of $200,000 and a book value of $194,000. The interest on these bonds was paid on June 30. When these bonds were issued, each $1,000 bond was convertible into 20 shares of $10 par common stock. To induce conversion, on June 15, 2008 the terms were changed so that each bond was convertible into 22 shares of common stock if the conversion was made within 30 days. All the bonds were converted on July 1, 2008 when the market price of the common stock was $50 per share.

Required

Using the book value method, record the conversion of the bonds on July 1, 2008.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...