P $14-19$ Convertible bonds; induced conversion; bonds with detachable warrants; disclosure note LO$14-5$

Bradley$-$Link's December $31,2024,$ balance sheet included the following items:

Long$-$Term Liabilities

in

millions$)$

$9\mathrm{.}6\%$ convertible bonds, callable at $101$ beginning in $2025,$ due $2028($net of unamortized discount of

$$198$

$$2)[$note $8]$

$10\mathrm{.}4\%$ registered bonds callable at $104$ beginning in $2034,$ due $2038($net of unamortized discount of $$1)$

$49$

$[$note $8]$

Shareholders' Equity

Equity$-$stock warrants

$4$

Note $8$: Bonds $($in part$)$

The $9\mathrm{.}6\%$ bonds were issued in $2011$ at $97\mathrm{.}5$ to yield $10\%.$ Interest is paid semiannually on June $30$ and December $31.$ Each $$1,000$ bond is convertible into $40$ shares of the Company's no par common stock.

The $10\mathrm{.}4\%$ bonds were issued in $2015$ at $102$ to yield $10\%.$ Interest is paid semiannually on June $30$ and December $31.$ Each $$1,000$ bond was issued with $40$ detachable stock warrants, each of which entitles the holder to purchase one share of the Company's no par common stock for $$25,$ beginning $2025.$

On January $3,2025,$ when Bradley$-$Link's common stock had a market price of $$32$ per share, Bradley$-$Link called the convertible bonds to force conversion. Ninety percent were converted; the remainder were acquired at the call price. When the common stock price reached an all$-$time high of $$37$ in December of $2025,40\%$ of the warrants were exercised.

$$

Required:

Prepare the journal entries that were recorded when each of the two bond issues was originally sold in $2011$ and $2015.$

Prepare the journal entry to record $($book value method$)$ the conversion of $90\%$ of the convertible bonds in January $2025$ and the retirement of the remainder.

Assume Bradley$-$Link induced conversion by offering $$150$ cash for each bond converted. Prepare the journal entry to record $($book value method the conversion of $90\%$ of the convertible bonds in January $2025.$

Assume Bradley$-$Link induced conversion by modifying the conversion ratio to exchange $45$ shares for each bond rather than the $40$ shares provided in the contract. Prepare the journal entry to record $($book value method$)$ the conversion of $90\%$ of the convertible bonds in January $2025.$

Prepare the journal entry to record the exercise of the warrants in December $2025.$