On January 1, 2024, Sheffield issued 10-year, $260,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of
Sheffield $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding
throughout its life. None of the bonds have been converted as of the end of 2025. (Ignore all tax effects.)
(a)
(b)
(c)
Assume that 75% of the holders of Sheffield's convertible bonds convert their bonds to stock on June 30, 2026, when Sheffield's
stock is trading at $32 per share. Sheffield pays $50 per bond to induce bondholders to convert. Prepare the journal entry to
record the conversion. (List all debit entries before credit entries. If no entry is required, select "No entry" for the account titles and enter 0
for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Jun. 30,
2026
Debit
Credit