40000007 Question 3 (10 marks) Stephen Inc. has $4,000,000 (par value), 10% convertible bonds outstanding. Each $1,000 bond is convertible into 20 no par value common shares. The bonds pay interest on January 31 and July 31. On July 31, 2022, the holders of $1,000,000 worth of bonds exercised the conversion privilege. On that date the market price of the bonds was 104, the market price of the common shares was $37, and the Contributed Surplus-Conversion Rights account balance was $650,000. The total unamortized bond premium at the date of conversion was $320,000. a) Using the book value method, what is the gain/loss that Stephen should record as a result of this conversion? (3 marks) b) How many common shares were issued? (3 marks) c) Using the book value method record the conversion. (4 marks) General Journal Date Account Titles and Explanation Ref Debit Credit