E16-6 (Conversion of Bonds) Gabel Company has bonds payable outstanding with a carrying value of $406,000. When issued, Gabel recorded $3,500 of conversion equity. Each $1,000 bond is convertible into 20 shares of preference shares with par value of $50 per share. All bonds are converted into preference shares. Instructions Assuming that the book value method was used, what entry would be made