On 1 July 2017 Stark Manufacturers Ltd issues convertible notes at their face value of $7,500,000. The notes are convertible into ordinary shares at the discretion of the holders. The notes pay interest at the rate of 3% per year each 30 June and mature in 7 years (on 30 June 2024). The company has a 30 June balance date.

On 1 July 2017, comparable debt without the conversion option yields 5% per year.

If the holders convert all their notes to ordinary shares on 1 July 2018, the journal entry credit to Share Capital will be (all numbers are rounded to nearest thousand dollars).

Select one:

a. $7,500,000

b. $7,071,000

c. $6,739,000

d. $7,607,000

e. $868,000