The Gallery Corporation has 400,000 of 6 per cent bonds outstanding. There is 20,000 of unamortised discount remaining on these bonds after the July 1, 20x2 semiannual interest payment. The bonds are convertible at the rate of 40 shares at a nominal value of 5 for each 1,000 bond. On July 1, 20x2, bondholders presented 300,000 of the bonds for conversion.
Prepare the journal entry to record the conversion of the bonds.