On April 1, 2024, Dj Vu Company issued 12% bonds that have a total face value of $140,000 (each bond has a face value of $1,000). The bonds sold for $164,023 and mature in 20 years. The effective interest rate for the bonds was 10% on 4/1/24. Interest is paid semiannually on September 30 and March 31. Each bond can be converted into 10 shares of Dj Vu Companys $1 par value common stock. The market value per share of Dj Vus common stock was $12 on 12/31/24 and $14 on 10/1/25. The market rate of interest on the bonds fell to 9% on 8/1/24.

	Cash	Interest	Premium	Carrying
	Interest	Expense	Amortized	Value
				164,023
9/30/2024	8,400	8,201	199	163,824
3/31/2025	8,400	8,191	209	163,615
9/30/2025	8,400	8,181	219	163,396
3/31/2026	8,400	8,170	230	163,166
9/30/2026	8,400	8,158	242	162,924
3/31/2027	8,400	8,146	254	162,670
9/30/2027	8,400	8,134	266	162,404

What is the change in total liabilities from the 3/31/25 journal entry to record interest expense? Provide a dollar amount and circle increase or decrease.

$___________ Increase Decrease

What would the increase in Dj Vu Companys common stock and paid-in capital accounts be if half of the bonds were converted into common stock on October 1, 2025?

Common Stock $_______________

Paid-in Capital $_______________