Question

How is wood converted into coal inside the earth

Answer 1

because of over heat and pressure inside the earth with act in contact with the wood is the surface which converts the wood into coal

Answer 2

Well the coal made from wood is by burning the pieces of wood until all the impurities are all burned from it and remains coal or charcoal  
The converting can be done artificially
 But naturally  
The coal formed by decomposition of plants or dead plants and form fossil fuel coal underground