On January $1,2024,$ when its $$30$ par value common stock was selling for $$80$ per share, Vaughn Corp.

issued $$11,500,000$ of $8\%$ convertible debentures due in $20$ years. The conversion option allowed the

hold of each $$1,000$ bond to convert the bond into $5$ shares of the corporation's common stock. The

debentures were issued for $$12,420,000.$ The present value of the bond payments at the time of

issuance was $$9,775,000,$ and the corporation believes the difference between the present value and

the amount paid is attributable to the conversion feature. On January $1,2025,$ the corporation's $$30$ par

value stock was split $2$ for $1,$ and the conversion rate for the bonds was adjusted accordingly. On

January $1,2026,$ when the corporation's $$15$ par value common stock was selling for $$135$ per share,

holders of $30\%$ of the convertible debentures exercised their conversion options. The corporation uses

the straight$-$line method for amortizing any bond discounts or premiums.

$($a$)$ Prepare the journal entry to record the original issuance of the convertible debentures.

$($List debit entry before credit entry. 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.$)$

$1$

I

$($b$)$ Prepare the journal entry to record the exercise of the conversion option, using the book

value method.

$($List debit entry before credit entry. 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.$)$