Answer:
B) $8 million.
Explanation:
There are $80 worth of convertible bonds, since half of them were converted to common stocks = $80 million x 50% = $40 million
Common stock = 6 million shares x 50% x $10 (par value) = $30 million
Unamortized balance in bond discount = $4 million x 50% = $2 million
Additional paid-in capital = convertible bonds - common stock - unamortized bond discount = $40 million - $30 million - $2 million = $8 million
June 30, 2013, Bond convertion:
Dr Bonds payable 40,000,000
Cr Common stock 30
,000,000
Cr Discount on bonds payable 2
,000,000
Cr Additional paid-in capital in excess of par value 8,000,000
