Tim Howard Gloves Issued 4

Tim Howard Gloves issued 4.75% bonds with a face amount of $24 million, together with 4 million shares of its $1 par common stock, for a combined cash amount of $44 million. The fair value of Howard's stock cannot be determined. The bonds would have sold for $18 million if issued separately. For this transaction, Howard should record paid-in capital-excess of par in the amount of:

A) $26 million
B) $22 million
C) $18 million
D) $16 million

Correct Answer:

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