Woodie Ltd issues $5 million in convertible bonds on 1 July 2023. They are issued at their face value and pay an interest rate of 4 per cent. The interest is paid at the end of each year. The bonds may be converted to ordinary shares in Woodie Ltd at any time in the next three years. Organisations similar to Woodie Ltd have recently issued similar debt instruments but without the option for conversion to ordinary shares. These instruments issued by the other entities offer interest at a rate of 6 per cent.

On 1 July 2024 all the holders of the convertible notes decide to convert the bonds to shares in Woodie Ltd.

Provide the journal entries to:

a)record the issue of the securities on 1 July 2023

b)recognise the interest payment on 30 June 2024, and

c)recognise the conversion of the bonds to ordinary shares on 1 July 2024.

Relevant PV values are as follows:

PV Factor for an annuity for 3 years = 2.6730

PV Factor for an amount to be received in 3 years' time = 0.8396