2) Montague Company issued 10-year convertible bonds on July 1, 20x5, as follows: Par value of bonds $ 1,200,000 Stated interest rate 5% Issuance price of bonds 104 plus accrued interest Bonds are dated March 1, 20x5 Interest payable semiannually March 1 and September 1 Amortization method used Straight-line On September 1, 20x7, bonds were converted into 20,000 shares of $15 par value common stock. Accrued interest was paid in cash at the time of the conversion. Percentage of outstanding bonds converted: 60% REQUIRED: a) Determine the amount of interest expense reported on the income statement for the year ended December 31, 20x5. b) Using the book value method, prepare the entry(ies) to record the bond conversion on September 1, 20x7. (Assume the entry to record the interest payment and amortization has already been made.) 3) Sherwood, Inc. issued bonds with detachable stock warrants, as follows: Par value of bonds $ 2,000,000 Stated interest rate on bonds 4% Two detachable stock warrants are issued with each $1,000 bond sold. At issuance, the bonds sold for $ 1,860,000 At issuance, the value of the bonds without the warrants: 1,536,000 At issuance, the value of the warrants: 384,000 REQUIRED: a) Determine the amount debited to the Discount on Bond Payable account at the time of issuance. b) Determine the amount credited to the Paid-in Capital - Stock Warrants account at the time of issuance