Sheffield Inc. issued $$2,760,000$ of comvertible $10-$year bonds on July $1,2025.$ The bonds provide for $13\%$ interest payable

semiannually on January $1$ and July $1.$ The discount in connection with the issue was $$58,800,$ which is being amortized monthly on a

straight$-$line basis.

The bonds are convertible after one year into $9$ shares of Sheffield Inc's $$100$ par value common stock for each $$1,000$ of bonds.

On August $1,2026,$ $$276,000$ of bonds were turned in for comversion into common stock. Interest has been accrued monthly and paid

as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash.

Prepare the joumal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates.

$($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.$)$

a$.$ August $1,2026.($Assume the book value method is used.$)$

b$.$ August $31,2026.$

c$.$ December $31,2026,$ including closing entries for end$-$of$-$year.

No$.$ Date Account Titles and Explanation

Aug.

a$.1.$

$2026$

$($To record the issuance of shares of common stock and

the write$-$off of the discount on bonds payable.$)$

Aug.

$2026$

$($To record payment in cash of interest accrued on

bonds.$)$

Aug.

b$.31,$

$2026$