Exercise 14-26 On January 1, 2021, Madison Products issued $41,800,000 of 8%, 10-year convertible bonds at a net price of $42,780,000. Madison recently issued similar, but nonconvertible, bonds at 98 (that is, 98% of face amount). The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 30 shares of Madison's no par common stock. Madison records interest by the straight-line method. On June 1, 2023, Madison notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2023. By June 30, all bondholders had chosen to convert their bonds into shares as of the interest payment date. On June 30, Madison paid the semiannual interest and issued the requisite number of shares for the bonds being converted. Prepare the necessary journal entries on the dates shown below. Credit Issuance of the convertible bonds Date Account 1/1/21 Cash Premium on Bonds Payable Convertible Bonds Payable Debit 42,780,000 Correct 980,000 41,800,000 Credit Interest expense (straight-line method) Date Account 6/30/21 Interest Expense Premium on Bonds Payable Cash Debit 1,623,000 49,000 Correct 1,672,000 Credit Interest expense (straight-line method) Date Account 12/31/21 Interest Expense Premium on Bonds Payable Cash Debit 17,880 49,000 Correct 66,880 Debit Credit Interest expense (straight-line method) Date Account 6/30/22 Premium on Bonds Payable Debit Credit Interest expense (straight-line method) Date Account 12/31/22 Premium on Bonds Payable Debit Credit Interest expense (straight-line method) Date Account 6/30/23 Premium on Bonds Payable Debit Credit Conversion of the bonds (book value method) Date Account 6/30/23 Premium on Bonds Payable