FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:Raimer Corp. has 400,000 shares of $20 par value common stock
outstanding throughout 20x2. In addition, the corporation has
500, $1,000, 5% bonds outstanding that were issued at par in
20x0. Each $1,000 bond is convertible into thirty 30) shares of
common stock. During 20x2, the corporation earned $600,000
of net income. The tax rate was 30%.
Assume that the bonds were issued at a premium, instead of
being issued at par. Assume that 100 of the bonds were
converted to common stock in 20x3. On the conversion date, the
bonds had a book value of $103,000.
Record the conversion. SHOW YOUR CALCULATIONS.
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