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Question
The Sports Corporation previously issued convertible bonds with a maturity value of $5,000,000; the book value of the bonds as of October 1, 2012 was $5,250,000. Each $1,000 bond is convertible into 100 shares of $5 par value common stock. On October 1, 2012, bonds with a maturity value of $2,000,000 were converted into common stock; the common stock's market value on the conversion date was $12.75 per share. Prepare the journal entry to record the bond conversion given the above facts only.
Answer
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