Bridge Corporation had two issues of securities outstanding-- common stock and a 5 percent convertible bond issue in the face amount of $10,000,000 . Interest payment dates of the bond issue are June 30 and December 31 . The conversion clause in the bond indenture entitles the bondholders to receive 40 shares of $20 par value common stock in exchange for each $1,000 bond. On June 30, 2014, the
holders of $1,800,000 face value bonds exercised the conversion privilege. The market price of the bonds on that date was $1,100 per bond and the market price of the common stock was $35 . The total unamortized bond discount at the date of conversion was $500,000 . What amount should Bridge credit to the account "Paid-In Capital in Excess of Par" as a result of this conversion assuming Bridge does not want to recognize any gain (or loss) on the conversion?
a. $0
b. $270,000
c. $360,000
d. $920,000
B
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