Shanghai Industries reported the following at September 30:

\section*{Required}
1. Record retirement of half the bonds on October 1 at the call price of 101 .
2. Record conversion of one-fourth of the bonds into 4,000 shares of Shanghai's \(\$ 5\)-par common stock on October 1. What would cause the bondholders to convert their bonds into stock?

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Long-term liabilities: Convertible bonds payable, 9%, 8 years to maturity...... Discount on bonds payable. $300,000 6,000 $294,000