Question

Thirty $1,000 bonds with a carrying value of $39,600 are converted into 4,000 shares of $5 par value common stock. The common stock had a market value of $9 per share on the date of conversion. The entry to record the conversion is ? where does bonds payable 30,000 comes from?

Bonds Payable ......................................................................... 30,000
        Premium on Bonds Payable ....................................................... 9,600
                   Common Stock ...............................................................           20,000
                   Paid-in Capital in Excess of Par..........................................           19,600

Answer 1

The entry to record the conversion is ?
Bonds Payable			Dr.	30000
Premium on Bonds Payable			Dr.	9600
	To, Common Stock				20000
	To, Paid-in Capital in Excess of Par				19600
(Being Bonds has been Converted in Stock)
where does bonds payable 30,000 comes from?
---> from the closure of Bonds account bonds payable has comes, same can be seen from following accounting entry
Bonds			Dr.	30000
Bonds Premium			Dr.	9600
	To, Bonds Payable				30000
	To, Premium on bonds Payable				9600
(Being Bonds Account has been closed & Payable is booked)