On January 1, 2019, $2,000,000 of five-year, 6% convertible bonds were sold by Company Z for $2,100,000. Interest is payable on June 30 and December 31 each year. The bonds can be converted in to 40,000 common shares at any time. At the time of issue, the market rate of interest for bonds of similar risk and duration without the conversion option was 7%. On January 1, 2020, the holders of $1,000,000 of the convertible bonds exercised their conversion option and exchanged their bonds for 20,000 common shares. The market value of the shares issued in exchange for these bonds was $ 1,300,000. Interest on the bonds was paid up to December 31, 2019. On January 1, 2021 Company Z repurchased the remaining $ 1,000,000 of the convertible bonds for $ 1,250,000.

1. Prepare the journal entries for all of 2019.

2. Prepare the journal entries for the conversion of the bonds on January 1, 2020.

3. Prepare the journal entries for the repurchase of the bonds on January 1, 2021.

4. Assuming Company Z uses ASPE, and elects to use the cost benefit option available under ASPE for these transactions, prepare the journal entries for Required 1, 2 and 3