On January 1 2015, when its $30 par value common stock was selling for $80 per share, a corporation issued $10 million 10% convertible debentures due in 10 years. The conversion option allowed the holder of each $1,000 bond to convert it into six shares of the corporations $30 par value common stock. The debentures were issued for $11 million. At the time of issuance, the present value if the bond payments was $8.5 million, and the Corporation believes the difference between the present cake and the amount paid is attributable to the conversion featuren On January 1, 2016 the corporations $30 par value common stock was split 3 for 1. On January 1x 2017, when the corporations $10 par value common stock was selling for $90 per share holders of 40% of the convertible debentures exercised their conversion options. The Corporation uses the straight line method of amortizing and bind discounts or premiums.

Prepare the journal entry to record the original issuance of the convertible debentures

Prepare the journal entry to record the exercise of the conversion option, using the book value method