On December,31 2014 Herndon Corp. issues 5.5%, 10 year convertible bonds payable with a maturity value of $4,000,000.The semi-annual interest dates are June 30 nd December 31.Herndon Cop. amortizes bonds by the effective-interest method.
1. Journalize the following transactions
a. Conversion by the bondholders on July 1 2016, of bonds with face value of $1,600,000 into 120,000 shares of Herndon Corp.'s shares of $1-par stock.
b. Show how Herndon would report the remaining bonds payable on a balance sheet on December 31, 2016