Racquet Ltd issued $20 million of convertible notes on 1 July 2013. The notes have a life of 6 years and a face value of $20 each. Annual interest of 5% is payable at the end of each year. The notes were issued at their face value and can be converted at any time over their lives. Organisations with a similar risk profile to Racquet Ltd have issued debt with similar terms but without the option to convert at the rate of 7%. What are the appropriate accounting entries to record the conversion of the notes to equity on 1 July 2014 (after interest has been paid and recorded)? A. Dr Convertible notes liability Dr Option to convert notes to equity Cr Share capital 18 359 921 1 906 616 20 266 537 Dr Comvertible notes liability Dr Option to convert notes to equity Cr Share capital 18 093 384 1906 616 20 000 000 C. Dr Convertible notes liability Dr Option to convert notes to equity Cr Gain on conversion of options Cr Share capital 18 359 921 1 906 616 266 537 20 000 000 D. Dr Convertible notes Cr Share capital 20 000 000 20 000 000 B.