On January 1, 2015, Tarco Company issued $500,000, parvalue, 8%, four-year convertible bonds. Each $1,000 bond is convertible into 30 shares of Tarco's $1 par common stock. Tarco received $572,598 for the bonds whenissued; consequently, the effective interest yield is 4%. Interest is payable annually each December 31. The bonds were converted on December 31, 2016, when the carrying value was

$537,722.

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What journal entry does Tarco record at the issue of thebonds? What is the journal entry to record theconversion