Family Food Industries reported the following at September 30: 

Long-term liabilities:
Convertible bonds payable $400,000
Less: Discount on bonds payable (12,000) $388,000

Requirements:
1. Record retirement of half of the bonds on October 1 at the call price of 101.
2. Imagine that the bonds had not been retired. What would cause the bondholders to convert their bonds into stock?

Journal
Date Accounts and Explanations Post Ref. Debit Credit
Oct 1
Computations:
Maturity value of bonds being retired
Less: Discount on bonds payable 
Carrying value of bonds payable
Less: Market price 
Loss on retirement of bonds payable 

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