On January 1, 2011, the Moon Travels, Inc., [MTI], issued $1,000,000, 8% , five-year convertible bonds for a cash price of $1,250,000. Interest is payable semi-annually on June 30 and December 31. Each $1,000 bond includes 20 warrants. Each warrant can be exchanged for one common share on MTI at an exercise price of $10 per share and the value of the conversion rights was estimated to be $94,700. The market rate of interest is 6% for similar bonds and similar warrants were being traded at $3.50 each. Each bond could be converted into 90 shares.

a) The appropriate journal entry to record the issue of the bonds on January 1, 2011 would be

b) How would the bonds be reported on the balance sheet, December 31, 2011?

c) Assume 30% of the warrants were exercised on July 1, 2013 when the shares of MTI were being traded at $11.50. The appropriate journal entry which the company should make on July 1 to record this transaction would be

d) Assume 40% of the bonds were converted on January 1, 2012 when the shares of MTI were being traded at $12.00. The appropriate journal entry which the company should make on January 1 to record this transaction would be