SCIFI Ltd. issued convertible bonds on 1 February 20X6. The 5-year, 3% $8,000,000 bonds pay interest semi-annually each 31 January and 31 July. At the investor’s option, each $1,000 bond is convertible into 50 common shares on the bond’s maturity date. The company has a 31 January year-end.
Bond market analysts indicated that if the bonds had not been convertible, they would likely have sold to yield 6%. They were, in fact, issued for $8,750,000.

Required:
1. Provide the journal entry to record the initial issuance of the bond.
2. Provide the entry to record interest at 31 July 20X6 and 31 January 20X7.
3. Provide the journal entry, assuming that on 1 February 20X7, the bonds were converted to shares, when the share price was $32 per share.