On 1 July 2020, Decker Ltd issues 3,000 convertible notes. The notes have a three-year term and are issued at par with a face value of $1,000 per note, giving total proceeds at the date of issue of $3 million. The notes pay interest at 6% p.a. annually in arrears. The holder of each note is entitled to convert the note into 400 ordinary shares of Decker Ltd at contract maturity. When the notes are issued, the prevailing market interest rate for similar debt (similar term, similar credit status of issuer and similar cash flows) without conversion options is 9% per annum.

Prepare the journal entries of Decker Ltd to account for the convertible notes for each year ending 30 June under the following circumstances

The holders do not exercise their option and the note is repaid at the end of its term.

Present value of $1 annuity over 3 years at 9% per annum	2.5312947
Present value of $1 lump sum in 3 years at 9% per annum	0.772183