Convertible Bonds On January 1, 2019, when its $30 par value common stock was selling for $80 per share, Ivanhoe Corp. issued $12,100,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporations common stock. The debentures were issued for $13,068,000. On January 1, 2020, the corporations $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporations $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. Required 1. Prepare the entry to record the original issuance of the convertible debentures. 2. Prepare the entry to record the exercise of the conversion option, using the book value method. Stock Compensation On November 1, 2020, Pronghorn Company adopted a stock-option plan that granted options to key executives to purchase 37,000 shares of the companys $11 par value common stock. The options were granted on January 2, 2021 and were exercisable two years after the date of grant if the grantee was still an employee of the company. The options expire 6 years from date of grant. The option price was set at $40, which was the market price of one share of the companys common stock on the date of grant. The fair value option-pricing model determines the total compensation expense to be $554,000. All of the options were exercised during the year 2023 when the market price was $65 a share. Required 1. Prepare the entry to recognize compensation expense for the stock option plan 2021. Assume that the employees perform services equally in 2022 and 2023 and none of the options are forfeited. 2. Prepare the entry to recognize exercise of the stock options during 2023.

Automatic 5 stars if completed before 18:10.