On January 1, 2023, Garner issued 10-year, $200,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Garner $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2024. (Ignore all tax effects.)

Instructions Requirement 1: Accounting

Prepare the journal entry Garner would have made on January 1, 2023, to record the issuance of the bonds.

Garner's net income in 2024 was $30,000 and was $27,000 in 2023. Compute basic and diluted earnings per share for Garner for 2024 and 2023.

Assume that 75% of the holders of Garner's convertible bonds convert their bonds to stock on June 30, 2025, when Garner's stock is trading at $32 per share. Garner pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the conversion.