On January $1,2024,$ when its $$30$ par value common stock was selling for $$80$ per share, Wildhorse Corp. issued

$$11,800,000$ of $8\%$ convertible debentures due in $20$ years. The conversion option allowed the holder of each

$$1,000$ bond to convert the bond into five shares of the corporation's common stock. The debentures were issued for

$$12,744,000.$ The present value of the bond payments at the time of issuance was $$10,030,000,$ and the corporation

believes the difference between the present value and the amount paid is attributable to the conversion feature. On

January $1,2025,$ the corporation's $$30$ par value common stock was split $2$ for $1,$ and the conversion rate for the bonds

was adjusted accordingly. On January $1,2026,$ when the corporation's $$15$ par value common stock was selling for

$$135$ per share, holders of $30\%$ of the convertible debentures exercised their conversion options. The corporation uses

the straight$-$line method for amortizing any bond discounts or premiums.

$($a$)$ Prepare the journal entry to record the original issuance of the convertible debentures. $($List debit entry before

credit entry. Credit account titles are automatically indented when amount is entered. Do not indent

manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the

amounts.$)$

Account Titles and Explanation

Debit

Credit

$($b$)$ Prepare the journal entry to record the exercise of the conversion option, using the book value method. $($List all

debit entries before credit entries. Credit account titles are automatically Indented when amount is

entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and

enter $0$ for the amounts.$)$

Account Titles and Explanation

Debit

Credit