Problem
Neal Corporation has outstanding 2,000 $1,000 bonds, each convertible into 10 shares of $10 par value common stock. The bonds are converted on December 31, 2015, when the unamortized discount is $40,000, and the market price of the stock is $35 per share. Record the conversion using the book value approach.Neal Corporation has outstanding 2,000 $1,000 bonds, each convertible into 10 shares of $10 par value common stock. The bonds are converted on December 31, 2015, when the unamortized discount is $40,000, and the market price of the stock is $35 per share. Record the conversion using the book value approach.