Gabel Company has bonds payable outstanding with a carrying value of $406,000. When issued, Gabel recorded $3,500

Question:

Gabel Company has bonds payable outstanding with a carrying value of $406,000. When issued, Gabel recorded $3,500 of conversion equity. Each $1,000 bond is convertible into 20 shares of preference shares with par value of $50 per share. All bonds are converted into preference shares.

Instructions

Assuming that the book value method was used, what entry would be made?

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,...