On December,31 2014 Herndon Corp. issues 5.5%, 10 year convertible bonds payable with a maturity value of $4,000,000.The semi annual interest dates are June 30 nd December 31.Herndon Cop. amortizes bonds by the effective-interest method.

1.Journalize the following transactions

a.Conversion by the bondholders on July 1 2016, of bonds with face value of $1,600,000 into 120,000 shares of Herndon Corp.'s shares of $1-par stock.

b.Show how Herndon would report the remaining bonds payable on a balance sheet on December 31, 2016