Walco Manufacturing Inc. holds 500 convertible bonds from Indwell Semiconductor which it purchased on January 1, year

Question:

Walco Manufacturing Inc. holds 500 convertible bonds from Indwell Semiconductor which it purchased on January 1, year 1 for $ 518,110. The face amount of each bond is $ 1,000. Each bond is convertible into one share of Indwell common stock. The of Indwell’s stock is $ 55.00. On January 2, year 1, Walco converted half of the bonds to common stock. Indwell uses the book value method to record the conversion. In the journal entry to record the conversion, what amount will Indwell debit to the premium on bond payable?
a. $ 0
b. $ 9,055
c. $ 13,750
d. $ 18,110 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,...