The directors of Vitafix Ltd decided:

• On 30 June 20x4, to issue 15 000 15%-convertible debentures of R50 each to the public at 95%.

• All debentures should be fully paid before allocation.

• The debentures are fully convertible into ordinary shares at the option of debenture holders on 30 June 20x8 at the ratio of 20 shares for every debenture held. The debentures not converted will be redeemed in full on 30 June 20x8.

• The debenture issue will be underwritten by ABC Underwriters at a commission of 7%.

• Applications were received for 18 000 debentures.

• All unsuccessful applicants were refunded.

• Debenture issue expenses of R6 000 were incurred.

You are required to:

1. Prepare the necessary journal entries to record the directors’ resolution. (Narrations are not required.)

2. Show the disclosure of debentures in the statement of financial position of Vitafix Ltd as at 30 June 20x4 in accordance with the requirements of the Companies Act and International Financial Reporting Standards (IFRS).