Problem
South ltd issued 6 million in convertible bonds on 1july 2023 they are issued at their face value and pay an interest rate of 7%. The interest is paid at the end of each year. The bonds may be converted to Ordinary shares in South ltd at any time in the next 3 years. Organizations similar to south ltd have recently issued similar debt instruments but without the options for conversion to Ordinary shares these instruments issued by other entities offer interest at a rate of 8% on 1 July 2024 all the holders of the convertible notes decided to convert the bonds to shares in South ltd.
Task
1. Record the issue of the securities on 1july 2023.
2. Recognize the interest payment on 30 June 2024.
3. Recognize the conversion of the bonds to Ordinary shares on 1 July 2024.