3. (Conversion of convertible bonds) Morgan Corporation had an 8% convertible bond issue in the face amount of $12,000,000. The conversion clause in the bond indenture entitles the bondholders to receive forty shares of $20 par value common stock in exchange for each $1,000 bond. On June 30, the holders of $1,800,000 face value bonds exercised the conversion privilege, Morgan paid $35,000 to the bondholders to entice them to convert the bonds. The market price of the bonds on that date was $1,100 per bond and the market price of the common stock was $35. The total unamortized bond discount at the date of conversion was $750,000. Prepare the journal entries necessary for the sweetner and conversion of the bonds