On January 1, 2018, Fowl Products issued $80 million of 6%, 10-year convertible bonds at a net price of $81.6 million. Fowl recently issued similar, but nonconvertible, bonds at 99 (that is, 99% of face amount). The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Fowl's $2 par common stock.Fowl's $2 par common stock had a market value of $18 per share on January 1, 2018.Fowls Fowl records interest by the straight-line method.

On June 1, 2020, Fowl notified bondholders of its intent to call the bonds at face value plus a 1% call premium on July 1, 2020. By June 30 90% of thebondholders had chosen to convert their bonds into shares as of the interest payment date. On June 30, Fowl paid the semiannual interest and then (subsequently) issued the requisite number of shares for the bonds being converted.

Required:

1. Prepare the journal entry for the issuance of the bonds by Fowl.

2. Prepare the journal entry for the June 30, 2020 conversion of the bonds (book value method) by Fowl.

3. If the market value of the common stock issued upon conversion (i.e. June 30, 2020) was more than the book value of the bonds on June 30, 2020 and Fowl used the market value method to account for conversion of the bonds, describe(in one or two sentences) how the journal entry in #2 would have changed.You do not have to quantify (i.e. calculate) the changes but rather describe the changes to the journal entry.