On January 1, 20X5, Pacific Inc., a publicly reportable company, issued (sold) $10,000,000 of 4%, six-year convertible bonds for net proceeds of $10,400,000. Each $1,000 bond is convertible into 20 common shares at the option of the investor. Similar non-convertible bonds were yielding 5%. Interest is paid semi-annually on June 30 and December 31. What is the amount that will initially be credited to bonds payable?