Question 12 (10 points) Q.3 (10 points) Saved On January 1, 2020, Slug Corporation issued $6 million of 8%, 10-year convertible bonds at 110% of par value. The bonds pay interest on June 30 and December 31, Each $1,000 bond is convertible into 40 shares of $1 par common stock. The market value of Slug's common stock 1/1/2020 was $27. Fuzz Company purchased 20% of the issue as an investment. On July 1, 2024, Fuzz converted all of its bonds into common stock of Slug. The market price per share for Slug was $48 at the time of the conversion. Both companies use the straight-line method for amortization and maturity date of 10 years. Required: Assuming Slug gives the conversion feature its intrinsic value, 1. Prepare journal entries for the issuance of the bonds by Slug. 2. Prepare the journal entries for the conversion on the books of Slug. 1) Issuance of the bonds by slug Cash 6,600,000 Convertible bonds payable Premium on bonds payable 2) Conversions on the books Convertible bonds payable Premium bonds payable Common Stock 6,000,000 600,000 1,200,000