At the year-end of 2018, Entity A faced with a huge cash shortage due to the slow receivable turnover. The board of directors called an urgent board meeting with all senior staff for discussing any feasibility to improve the cash flow problem. After the meeting, the board of directors agreed to issue 9,000 convertible debts on 1 January 2019. The contract term of the convertible debts is 3 years. The face value of each convertible debt is $5,000. The convertible debt holders own the right for the conversion at the contract end. During the issuing process, the issue costs of $896,025 were incurred. Interest is payable annually in arrears at a nominal annual interest rate of 4.75%. Each debt can be converted at the contract end into 5,000 ordinary shares of Entity A. When the debts are issued, the prevailing market interest rate for similar debt without conversion options is 6.00% After the deduction of the issue cost, the effective interest rate is adjusted to 6.75%. At the contract end, 18% of the holders exercised their rights for receiving cash and 36% of holders were agreed to receive ordinary shares from Entity A. However, the remaining holders kept silence. Entity A extended the deadline for them to opt for receiving cash or shares to 7 January 2022. Finally, they agreed to receive cash on the new extended deadline. REQUIRED: Provide the journal entries of Entity A at 1 January 2019 and 31 December 2021 under the HKAS 32 Financial Instruments: Presentation and HKFRS 9 Financial Instruments. Based on PART ONE Question 4, you are required to provide explanations under HKAS 32 Financial Instruments: Presentation and HKFRS 9 Financial Instruments. REQUIRED: What is the accounting treatment of the convertible debts issued by Entity A? Explain in detail. (4 Marks)