Example 9

Campbell Company has $2,000,000 of 8% convertible bonds outstanding. Each $1,000 bond is convertible into 15 shares of $15 par value common stock. The bonds pay interest on June 30 and December 31. On June 30, 2022, 25% of the bonds were converted into common stock. The total unamortized bond premium at the date of conversion was $140,000.

Required:

Prepare the appropriate journal entry to record the conversion of the bonds.