E16-5B (Conversion of Bonds) The December 31, 2013, balance sheet of West Word Corp. is as follows.12% callable, convertible bonds payable (semiannual interestdates June 30 and December 31; convertible into 15 shares of $10par value common stock per $1,000 of bond principal; maturitydate June 30, 2027) $2,500,000Premium on bonds payable 110,050 $2,610,050On April 15, 2014, West Word Corp. called all of the bonds as of May 31, 2014 for the principal plus interestthrough May 31. By May 31, one-half of the bondholders had exercised their conversion to commonstock as of the interest payment date. Consequently, on May 31, West Word Corp. paid the interest1311111B EXERCISESc16BExercises.qxd 1/28/13 1:24 PM Page 1due to all bondholders, issued shares of common stock for one-half of the bonds, and paid cash to retirethe remainder of the bonds. The premium is amortized on a straight-line basis and West Word uses thebook value method.InstructionsPrepare the entry(ies) to record the interest expense, conversion, and call on May 31, 2014. (Round to thenearest dollar.)
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