Branson Corporation issued $500,000 of convertible bonds at par value on January 1. The bonds were issued with a stated interest rate of 3%. Each $1,000 bond is convertible into 20 shares of the corporations $1 par value common stock. Branson may also elect to settle bonds with a cash payment in lieu of issuing stock. Similar bonds without the conversion feature would have sold for $455,000.

Required:

Prepare the journal entry for Branson to record the issuance of the convertible bonds.