Undecided Ltd issued 100,000 convertible notes on 1 January 2021. The notes have a four-year term and were issued at par with a face value of $10 per note, giving total proceeds of $1,000,000. Interest is payable annually in arrears at a nominal interest rate of 8% per annum. Each note is convertible into one ordinary share at or prior to maturity. The prevailing market interest rate at issue was 10% per annum.

Required:

Prepare the journal entries for the issue of the convertible notes and the payment of interest at the following dates:

I1 January 2021

II31 December 2021

III31 December 2022