Worldview Magazine, Inc., issued \(\$ 700,000\) of 15 -year, \(81 / 2 \%\) convertible bonds payable on July 31,2006 , at a price of 98 . Each \(\$ 1,000\) maturity amount of the bonds is convertible into 50 shares of \(\$ 5\) par stock. On July 31,2009 , bondholders converted the bonds into common stock.

Requirements 1. What would cause the bondholders to convert their bonds into common stock?

2. Without making journal entries, compute the carrying amount of the bonds payable at July 31, 2009. The company uses the straight-line method to amortize bond discount.

3. All amortization has been recorded properly. Journalize the conversion transaction at July 31, 2009. No explanation is required.