On January 1,2020 , Sierra Corp. issued \(500, \$ 1,000,6 \%\) convertible bonds at face value. Each bond is convertible into 15 shares of \(\$ 1\) par value common stock. As an inducement to convert the bonds into common stock in 2022 prompted by a drop in interest rates, the company offered \(\$ 35,000\) to bondholders, payable upon conversion. All of the bondholders converted to common stock in June of 2022.

Required

a. Provide the entry for issuance of bonds on January 1, 2020.

b. Provide the entry for Sierra Corp. for conversion of the bonds in June of 2022, using the book value method.