Business, 24.10.2019 06:43 allenlitterell

Hrustic company issued $750,000 of 12% convertible bonds at face value on an interest payment date several years ago. the face value of each bond is $1,000, and each bond is convertible into 25 shares of $1 par common stock. hrustic has embarked on a program of debt reduction; u. s. interest rates have declined during the term of the convertible bonds. consequently, hrustic offers the convertible bondholders $500 cash per bond as an inducement to convert. the market price of hrustic stock is currently $70 per share. the bonds must be converted within a three-month period to receive the cash inducement. the bondholders accept the inducement and convert within the required period. required: explain why the bondholders decided to convert their bonds into shares of common stock. record the conversion using the book value method.

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Hrustic company issued $750,000 of 12% convertible bonds at face value on an interest payment date s...

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