Reference no: EM134019

Question :

On 1^st January, 2012, when its $32 par value common stock was selling for $73 per share, Bartz Corp. issued $11,290,000 of 8 percent convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation's common stock. The debentures were issued for $11,967,400. The current value of the bond payments at the time of issuance was $8,922,000, and the corporation believes the difference between the current value and the amount paid is attributable to the conversion feature. On 1^st January, 2013, the corporation's $32 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On 1^st January, 2014, when the corporation's $19 par value general stock was selling for $150 per share, holders of 20 percent of the convertible debentures exercised their conversion options. The corporation uses the straight-line technique for amortizing any bond discounts or premiums.

Purpose the entry to record the exercise of the conversion option, using the book value method.