Larkspur Inc. issued $$5,550,000$ of convertible $5-$year bonds on July $1,2025.$ The bonds provide for $6\%$ interest payable

semiannually on January $1$ and July $1.$ The discount in connection with the issue was $$117,000,$ which is being

amortized monthly on a straight$-$line basis.

The bonds are convertible after one year into $15$ shares of Larkspur Inc.$\text{'}$s $$1$ par value common stock for each $$1,000$ of

bonds.

On October $1,2026,$$$666,000$ of bonds were turned in for conversion into common stock. Interest has been accrued

monthly and paid as due. At the time of conversion, any accrued interest on bonds being converted is paid in cash.

Prepare the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the

following dates. $($Credit account titles are automatically indented when amount is entered. Do not

indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the

amounts. List all debit entries before credit entries.$)$

$($a$)$ October $1,2026.($Assume the book value method is used.$)$

$($b$)$ October $31,2026.$

$($c$)$ December $31,2026,$ including closing entries for end$-$of$-$year.

No$.$ Date Account Titles and Explanation

Debit

Credi

Oct

$($a$)1,$

Bonds Payable

$666000$

$2026$

Discount on Bonds Payable

Common Stock

Paid$-$in Capital in Excess of Par $-$ Common Stoc

$($To record conversion of bonds to common

stock$)$

Oct.

$1,$

$2026$

Cash

$($To record payment of interest due on converted

bonds$)$

Oct.

$($b$)31,$

$2026$

Discount on Bonds Payable

$($To record amortization of discount on bonds$)$

Oct.

$31,$

$2026$

Interest Expense

Interest Payable

$($To record accrual of interest payable on bonds$)$

$($c$)31,$

$2026$

Discount on Bonds Payable

$($To record amortization of discount on bonds$)$

Dec.

$31,$

$2026$

Interest Payable

$($To record accrual of interest payable on bonds$)$

Dec.

$31,$

$2026$

Interest Expense

Discount on Bonds Payable

$($To record accrual of interest payable on bonds$)$

$(10$ record amorization of discount on bonas$)$

$($To record accrual of interest payable on bonds$)$

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