Buffalo Inc. issued $$14,100,000$ of $12\%,40-$year convertible bonds on November $1,2025,$ at $96$ plus accrued interest. The bonds were

dated July $1,2025,$ with interest payable January $1$ and July $1.$ Bond discount $($premium$)$ is amortized semiannually on a straight$-$line

basis.

On July $1,2026,$ one$-$half of these bonds were converted into $58,000$ shares of $$1$ par value common stock. Accrued interest was paid

in cash at the time of conversion.

$($a$)$ Prepare the entry to record the interest expense at December $31,2025.$ Assume that accrued interest payable was credited

when the bonds were issued. Credit Interest Payable for the full amount due; debit Interest Payable for the amount

recognized at insurance. $($Round to nearest dollar.$)$

$($b$)$ Prepare the entry to record the conversion on July $1,2026.($Book value method is used.$)$ Assume that the entry to record

amortization of the bond discount and interest payment has been made.

$($Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for

the account titles and enter $0$ for the amounts. Round answers to $0$ decimal place, e$.$g$.5,125.$ List all debit entries before credit entries.$)$

No$.$ Account Titles and Explanation

Debit

$($a$)$

Interest Payable

Interest Expense

Discount on Bonds Payable

$($b$)$

Bonds Payable

Discount on Bonds Payable

Paid$-$in Capital in Excess of Par $-$ Common Stock

Credit