On January 1, 2022, Gless Textiles issued $12million of 9%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 ordinary shares of Gless. The market price for nonconvertible 10-year bonds of similar risk was $11,880,000. The effective interest rate on the bond without conversion option was 9.157%.

Required:

1. Prepare the journal entries for the issuance of the bonds by Gless.

2. Prepare the bond amortization table for Gless from January 1, 2022 to June 30, 2026.

3. Prepare the journal entries for the June 30, 2026, interest payment by Gless using effective interest method.

4. On July 1, 2026, when Glesss shared had as market price of $33 per share, 10% of bondholders converted the bonds they held. Prepare the journal entries by Gless for the conversion of the bonds.