1. Luther Corp. issued $50,000,000 par value 8% convertible bonds at 102. If the bonds had not been convertible, the company's investment banker estimates they would have been sold at par. Expenses of issuing the bonds were $750,000.
2. Luther Corp. issued $35,000,000 par value 12% bonds at 101. One detachable stock purchase warrant was issued with each $1,000 par value bond. At the time of issuance, the warrants were selling for $6.50.
3. On October 31, 2012, Luther Corp. called its 10% convertible debentures for conversion. The $60,000,000 par value bonds were converted into 600,000 shares of $1 par value common stock. On October 31, there was $155,000 of unamortized premium applicable to the bonds, and the company paid an additional $355,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.