Flounder Corporation has outstanding 1,700 $1,000 bonds, each convertible into 70 shares of $10 par value common stock. The bonds are converted on December 31, 2020, when the unamortized discount is $26,900 and the market price of the stock is $21 per share. Required:
Record the conversion using the book value approach.

Dr Bonds Payable 1,700,000

Cr Discount on Bonds Payable 26,900

Cr Common Stock 1,190,000

Cr PIC in excess of Par 483,100

Explanation:

Flounder Corporation Record of conversion using the book value approach

Dr Bonds Payable 1,700,000

(1,700 bonds x $1000)

Cr Discount on Bonds Payable 26,900

Cr Common Stock 1,190,000

(70 shares x $10 x 1,700 bonds)

Cr PIC in excess of Par 483,100

Calculation of PIC in excess of Par

Bonds Payable 1,700,000

Less:

Discount on Bonds Payable (26,900)

Common Stock (1,190,000)

=483,100