Illustration 3:

On July 1, 2020, Friendly Company issued $100,000 par(100 bonds with $1000 par per bond) of 12%, 10-year bonds dated Dec 31 at 102. Interest is payable semiannually on July 1 and Dec 31.

Each $1,000 bond is convertible into 20 shares of common stock of par value of $50 per share. All bonds are converted into common stock on Dec 31, 2022.

Instructions

What entries would be made for the above transactions, including bonds issuance and interest payment in 2020 and bonds conversion in 2022?

Please show step by step.