BondTerrier Inc., a publicly listed company, issues 15 year convertible (at the holder's option) bonds with a face value

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BondTerrier Inc., a publicly listed company, issues 15 year
convertible (at the holder's option) bonds with a face value of
$1,000,000 and a coupon rate of 6.00% for $795,600. Bond interest
is paid semi-annually. When the bonds are issued, the prevailing
market interest rate (yield or effective interest rate) for similar
debt without a conversion option is 9.00%. Option pricing models
indicate that the conversion option's value on the date the bonds
are issued is $76,500. Assume the convertible option is a
derivative that is not closely related to the bond liability and
that Bond Terrier Inc. has decided not to treat the entire hybrid
instrument as held for trading (at fair value through profit or
loss). Each $1,000 face value bond can be converted by the holder
into 30 (= 30,000/$1,000,000/$1,000) shares. Similar bonds without
a conversion option sell on the open market at 75.567777%. 50% of
the $1,000,000 face value bonds are converted after interest is
paid at the end of semi-annual period 18 when the fair market value
per share is $125. Assume all transactions occur on interest
payment dates. Required (provide all supporting calculations)
Provide the journal entry to record the conversion.