Exercise 1: On January 1, 2019, ABC Corp. issued a convertible bond with a par value of $100,000 in the market for $120,000. The bonds are convertible into 12,000 ordinary shares of $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, 2019, is 8%. The liability component of the bond is computed to be $ 107,986. The following bond amortization schedule is provided for this bond. Cash Date Carrying Amount Interest Time Interest Premium Carrying Amount Paid of Bonds Rate 12/12 Expense Amortization of Bonds 1/1/2019 107,986 31/12/2019 10,000 107,986 8% 1.0 8,639 1,361 106,625 31/12/2020 10,000 106,625 31/12/2021 10,000 31/12/2022 10,000 103,567 31/12/2023 10,000 101,853 8% 1.0 8,530 1,470 105,155 105,155 8% 1.0 8,412 1,588 103,567 8% 1.0 8,285 1,715 101,853 8% 1.0 8,147 1,851 100,000 Instructions: a) Prepare the journal entry to record the issuance of the convertible bond on January 1, 2019. b) Prepare the journal entry to record the payment of interest on December 31, 2020. c) Assume that the bonds were converted on December 31, 2021. The fair value of the liability component of the bond is determined to be $ 108,000 on December 31, 2021. Prepare the journal entry to record the conversion on December 31, 2021. Assume that the accrual of interest related to 2021 has been recorded. d) Assume that the convertible bonds were repurchased on December 31, 2021, for $111,000 instead of being converted. The liability component of the bond is determined to be $ 108,000 on December 31, 2021. Assume that the accrual of interest related to 2021 has been recorded. e) Assume that the bonds matured on December 31, 2023, and Lin repurchased the bonds. Prepare the entry to record this transaction. Assume that the accrual of interest related to 2023 has been recorded.