On January 1, 2021, Gretta Cat Co. (GCC) issued (sold) $2,000,000 of five-year, 5% convertible bonds that pay interest semi-annually on June 30 and December 31. At the investor’s option, each $1,000 bond may be converted into 10 common shares any time after December 31, 2024. The sales proceeds realized were $2,100,000 less a $40,000 fee charged by GCC’s investment banker. Similar bonds without the conversion feature were yielding 6% at that time. GCC reports its financial results in accordance with IFRS. 

Required: 

a. Allocate the sales proceeds to the liability and equity components of the convertible bond. 

b. Record the issuance of the bonds. 

c. Determine the effective interest rate per period on the bond liability.