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1. Conversion of preferred shares to common shares requires that any excess of the par value of the common shares issued over the book value of the preferred shares being exchanged be I o reflected in income for that period. b. reflect as expense for that period. c. Treat as a prior period adjustment. d. treat as a reduction of retained earnings. 2. On July 1, 2020, the interest payment date, $ 90,000 in Parks Co. bonds were converted to 1,800 Parks Co. common stock. The common stock had a par value of $ 45 and a market value of $ 54. As of that same date, the Discount on Bonds for Paying without amortization was $ 3,600. Using the book value method, Parks must record a. no change in Contributed Capital in Excess of Par Value. b. an increase of $ 5,400 in Contributed Capital in Excess of Par Value. c. an increase of $ 10,800 in Contributed Capital in Excess of Par Value. d. an increase of $ 7,200 in Contributed Capital in Excess of Par Value 3. On July 1, 2019, Ellison Company granted Sam Wine, an employee, the option to purchase 1,000 shares of Ellison Co. for $ 30 a share. Using an option pricing model, the total cost of compensation was determined to be $ 4,500. Ellison Co.'s stock market values in 2019 were: July 1 $ 30 per share December 1 $ 40 per share The service period is three years beginning on January 1, 2020. As a result of the granting of this option to Wine, and using the market value method, Ellison had to recognize a compensation expense in its books for 2019 of a. $ 4,500 b. S 1,500 c. $ 1,125 d. So

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