Determine Credit to PIC -C/S
KSR Inc. has two issues of securities outstanding: common stock and $3,400,000 face value, 5-year, 2%, convertible bonds. The bonds were issued January 1st, 2022, for $3,094,592 when the market rate was 4%. Bond interest payment dates are June 30th and December 31st. Each bond is convertible into 45 shares of $20 par value common stock. On July 1, 2022, the holders of $510,000 face value bonds exercised the conversion privilege. On that date, the bonds were selling at 108 and the market price of the stock was $38. The company uses the effective interest method for the amortization of bond discounts and/or premiums and the book value method to account for the conversion.
Required: Determine the amount to be credited to “Paid-in-Capital for Common Stock” on July 1st, 2022. If an amortization table is needed (hint-through June 30, 2022), please submit that work as well. Round all work to the nearest dollar. Please show all work.
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