On January $1,2020$ CCL issued $8\%$ convertible bonds at their nominal value of $$27,000,000.$ The

bonds are convertible at any time up to maturity into $50$ ordinary shares for each $$600$ of bond.

Alternatively, the bonds will be redeemed at par after $4$ years. Similar non$-$convertible bonds carry

an interest rate of $10\%.$ On January $12021,$ the company issued $2,000,000$ ordinary shares at a

price of $$5\mathrm{.}50$ which was fully subscribed. This was followed by a bonus issue of $1$ share for $5$

held on that date, funding came from the share premium account which at that date had a balance

of $$4,700,000$ and retained earnings a balance of $$12,520,000.$ Show the journal entries to record the cash and bonus issue of shares on $1$ January $2021$

and explain two $(2)$ advantages of issuing bonus shares