On 1 July 2017, Sarcochilus Ltd issued 10,000 convertible notes. The notes had a five-year term and were issued at a face value of $500 per note. Interest was payable annually on 30 June each year at 5% per annum in arrears. Each note was convertible at the option of the holder into 10 ordinary shares on or before maturity. On 1 July 2017, the market interest rate for similar notes, without a conversion option, was 8% per annum.

REQUIRED:

Assume that half of the notes are converted into ordinary shares at the end of the fifth year ending 30 June 2022 (following the interest payment). Prepare a journal entry to record the redemption of notes not converted into ordinary shares in the books of Sarcochilus Ltd.