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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

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.

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

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