7 (15 Marks) On January 1, 2021, Stan Company issued a convertible bond with a par value of HK$100,000 in the market for HK$120,000. The bonds are convertible into 12,000 ordinary shares of HK$1 per share par value. The bond has a 5-year life and has a stated interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond at January 1, 2021, is 8%. The liability component of the bond is computed to be HK$107,986. The following bond amortization schedule is provided for this bond. Effective-interest method 10% Bond Discounted at 8% Carrying Amount Date Cash Paid Interest Expense Premium of Bonds Amortized 1/1/21 HK$107,986 12/31/21 HK$10,000 HK$8,639 HK$1,361 106,625 12/31/22 10,000 8,530 1,470 105,155 12/31/23 10,000 8,412 1,588 103,567 12/31/24 10,000 8,285 1,715 101,852 12/31/25 10,000 8,148 1,852 100,000 Required: (a) Prepare the journal entry to record the issuance of the convertible bond on January 1, 2021. [3 marks] (b) Assume that the bonds were converted on December 31, 2023. The fair value of the liability component of the bond is determined to be HK$108,000 on December 31, 2023. Prepare the journal entry to record the conversion on December 31, 2023. Assume that the accrual of interest related to 2023 has been recorded. [4 marks] (c) Assume that the convertible bonds were repurchased on December 31, 2023, for HK$111,000 instead of being converted. The liability component of the bond is determined to be HK$108,000 on December 31, 2023. Assume that the accrual of interest related to 2023 has been recorded. [8 marks]