On January 1, 2018, HTL Manufacturers issued $100 million of 8% convertible debentures due 2038 at 103.

The bonds are convertible at the option of the holder into $1 par valuecommon stock at a conversion ratio of 40 shares per $1,000 bond.

HTL recently issued conconvertble, 20-year, 8% debentures at 98.

Subsequent to the issue, one half of the convertible bonds issued by HTL Manufacturers are converted at a time when the remaining unamortized premium is $2 million.

Required: Prepare the journal entries to record the debt issue and conversion.