Trear Company has $80,000, 10%, 12 year convertible bonds outstanding. These bonds were sold at face value and pay semiannual interest on June 30 and December 31 of each year. The bonds are convertible into 40 shares of $5 par value common stock for each $1,000 par value bond. On December 31 after the bond interest has been paid, $20,000 par value bonds are converted. The market value of Trear's common stock was $38 per share. Instructions: prepare the necessary journal entry to record the conversion.

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