Dilutive Securities and EPS Worksheets Part 1: Convertible Securities and Detachable Warrants I. JAMC Corp. issues $10,000,000 of bonds on May 24, 2018 at a discount of $600,000. Interest on the bonds is payable each October 24 and May 24 Each $1,000 bond (i.e., there were 10,000 issued) is convertible to 20 shares of common stock (par value $3). On October 24, 2022, 2,000 of the bonds are converted. At the time of the conversion, the total remaining unamortized discount is $450,000, the market value of the bonds is $960 each and the stock is quoted on the market at $120. 1. Prepare the journal entry at May 24, 2018 to record the initial issuance of the convertible bonds. 2. Prepare the journal entry at October 24, 2022 to record the bond conversion. II. GBV Corporation issues 2,000 shares of preferred stock (par value $1) on February 20, 2019 for $1.20 per share. Each share of the preferred stock is convertible to one share of common stock. 1,000 of the preferred shares are converted to common stock on November 11, 2023. 1. Prepare the journal entry to record the issuance of the preferred stock on February 20, 2019. 2. Assume that the par value of GBV's common stock is $0.50. Prepare the journal entry to record the conversion at November 11, 2023. II. YLT Corp. issues 5,000 bonds with warrants attached that give the holder the option to buy a share of YLT common stock (par value $1) at sometime in the future for $15. Each individual bond has a face amount of $1,000 and comes with one detachable warrant. The bonds (with the attached warrants) were issued at 102. Just after issuance, the bonds alone (i.e.., without the warrants) were trading at 101 on the secondary market. At the same time, the warrants were trading separately on the secondary market for $20. 1. Using the proportional method to allocate issuance proceeds, prepare the appropriate journal entry to record the bond/warrant issuance. 2. Assume that all 5,000 warrants are later exercised (one warrant per one share of stock). Prepare the journal entry to record the exercise