On January 1, 2019, Lin plc issued a convertible bond with a par value of £50,000 in the market for £60,000. The bonds are convertible into 6,000 ordinary shares of £1 per share par value. The bond has a 5-year life and has a stated interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond at January 1, 2019, is 8%. The liability component of the bond is computed to be £53,993. The following bond amortization schedule is provided for this bond.

Instructions
a. Prepare the journal entry to record the issuance of the convertible bond on January 1, 2019.
b. Prepare the journal entry to record the payment of interest on December 31, 2020.
c. Assume that the bonds were converted on December 31, 2021. The fair value of the liability component of the bond is determined to be £54,000 on December 31, 2021. Prepare the journal entry to record the conversion on December 31, 2021. Assume that the accrual of interest related to 2021 has been recorded.
d. Assume that the convertible bonds were repurchased on December 31, 2021, for £55,500 instead of being converted. As indicated, the liability component of the bond is determined to be £54,000 on December 31, 2021. Assume that the accrual of interest related to 2021 has been recorded.
e. Assume that the bonds matured on December 31, 2023, and Lin repurchased the bonds. Prepare the entry(ies) to record this transaction.

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Effective-Interest Method 10% Bond Discounted at 8% Cash Paid Interest Expense Premium Amortized Carrying Amount of Bonds Date 1/1/19 £53,993 53,312 52,577 12/31/19 £681 £5,000 5,000 5,000 5,000 £4,319 4,265 4,206 12/31/20 735 12/31/21 794 51,783 12/31/22 4,143 4,074 50,926 50,000 857 12/31/23 926 5,000