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A gain or loss on early extinguishment of debt should be recorded for the difference between the reacquisition price and the book value of the debt. Convertible bonds are accounted for as straight debt, but the value of the equity feature is recorded separately for bonds issued with detachable warrants.Knowledge Check $01$

Kelly Company issued $$100,000$ of $5\%,10-$year bonds at $102$ to a single investor. Each of the $$1,000$ bonds was convertible into $100$ shares of no par common stock. The bonds were later converted when the remaining unamortized premium was $$1,000.$ What is the amount that Kelly will credit to Common Stock when recording the conversion of the bonds?