Computalog Inc. showed the following on its December 31, 2023, balance sheet:

Required1. Assuming the bonds are convertible into 400,000 common shares, journalize the conversion on January 1, 2024, when the market value per common share was $10.25.2. How will the conversion of bonds into common shares affect the elements of the balance sheet (assets, liabilities, equity)?

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Bonds payable, convertible........... Less: Unamortized discount... $4,000,000 14,400 $3,985,600