On July 1, 2019, when its $1 par value common stock was selling for $66 per share, Shamrock Corp. issued $26,500,000 of 6% convertible notes maturing in 10 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into 10 common shares of the corporation. The debentures were issued for $28,090,000. The corporation believes that the difference between the nominal value and the amount paid is attributable to the conversion function. On January 1, 2020, the corporation's common stock was split 2-for-1 and the bond conversion rate was adjusted accordingly. On January 1, 2021, when the corporation's $0.50 par value common stock was selling for $38 per share, holders of 10,600 of the convertible debentures exercised their conversion options. The corporation uses the straight-line method to amortize any bonus discounts or premiums. (a) Prepare in the general journal the entry to record the original issue of the convertible bonds. (b) Prepare in the general journal the entry to record the exercise of the conversion option, using the book value method. Show supporting calculations in good shape.

On July 1, 2019, when its $1 par value common stock was selling for $66 per share, Shamrock Corp. issued $26,500,000 of 6% convertible debentures due in 10 years. The conversion option allowed the holder of each $1.000 bond to convert the bond into 10 shares of the corporation's common stock. The debentures were issued for $28,090,000. The corporation believes the difference between the par value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation's common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation's $0.50 par value common stock was selling for $38 per share, holders of 10,600 of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (a) Prepare in general journal form the entry to record the original issuance of the convertible debentures. (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 in general journal form the entry to record the exercise of the conversion option, using the book value method. Show supporting computations in good form. (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 O for the amounts)