On July 1, 2020, Whispering Ltd., which follows ASPE, issued 1,000 convertible, five-year, $1,000 bonds. Each bond is convertible into 20 common shares at the bondholder's option. On the date of issuance, the bond's conversion rights were valued at $51,000.

On July 1, 2023, the bonds had a carrying value on Whispering's books of $972,000, and the fair market value of the bonds without the convertible option was $980,000.

Assume all the bondholders voluntarily decided to convert their bonds to common shares on July 1, 2023.

Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

Assume instead that Whispering paid the bondholders an incentive of $17,000 to convert their bonds to common shares, and that all the bondholders agreed to convert their bonds to common shares on July 1, 2023.

Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Account Titles and Explanation Debit Credit

list of accounts

Accounts Payable Bonds Payable Cash Common Shares Compensation Expense Contributed Surplus - Conversion Rights Contributed Surplus - Conversion Rights Expired Contributed Surplus - Expired Stock Options Contributed Surplus - Stock Options Contributed Surplus - Stock Warrants Cost of Goods Sold Deficit Derivatives-Deposits Derivatives - Financial Assets/Liabilities Equipment Equity - Fixed-for-fixed Derivative Fair Value - NI Investments Fair Value - OCI Investments Future Income Tax Liability Gain or Loss on Derivatives Interest Expense Interest Income Interest Payable Interest Receivable Inventory Liability under Share - Appreciation Rights Plans Loss on Redemption of Bonds Loss on Retirement of Bonds No Entry Notes Payable Notes Receivable Preferred Shares Raw Materials Retained Earnings Sales Revenue Supplies Unrealized Gain or Loss - OCI