Immediately After the Last Interest Payment, Henry Company Converted $2,700,000

Multiple Choice

Immediately after the last interest payment, Henry Company converted $2,700,000 of its bonds into 270,000 shares of $10 par value common stock. The unamortized premium on the bonds at the date of the conversion was $900,000. As a result of this conversion:

A) liabilities decreased by $3,600,000 and stockholders' equity decreased by $3,600,000.
B) liabilities decreased by $2,700,000 and stockholders' equity increased by $2,700,000.
C) liabilities decreased by $3,600,000 and stockholders' equity increased by $3,600,000.
D) liabilities decreased by $900,000 and stockholders' equity increased by $900,000.