On July 1, 2020 oxygen ltd issued 100,000 bonds for a term of 6 years. each of the bonds was issued at its face value kf $10 which wohld be converted into 5 ordinary shares at the investor's discretion at any time during the life of the bond.

the coupon interest rate was 3% per annum payable annually in arrears. firms of a similar risk profile have recently issued debt with similar terms but without the option for conversion with a market rate of return of 4% per annum. assume that no transaction costs were incurred in issuing the bonds

1. prepare journal entries to be tecorded by oxygen lyd on 30 june 2021

2. assume conversion option has been exerced by 6 year oeriod endinf 30 june 2026. prepare journal entries to be recorded on 30 june 2026

provided is yhe following present value tables

Present Value of $1 Periods 2% 3% 4% 5 0.906 0.863 0.822 6 0.888 0.837 0.790 7 0.871 0.813 0.760 Present Value of Annuity in Arrears of $1 Periods 2% 3% 4% 5 4.713 4.580 4.452 6 5.604 5.417 5.242 7 6.472 6.230 6.002