Twixt Corp. issued $5,000,000 of convertible bonds on 1 January for $4,790,000 cash. The bond had the following terms:
• Bonds mature in five years’ time.
• Annual interest, 5%, is paid each 31 December.
• Bonds are convertible to 400,000 common shares at maturity or can be repaid in cash. This choice is up to Twixt Corp. Current market interest rates are 6%.

Required:
1. Assign a value to the liability and the equity portions of the bond.
2. Provide the journal entry to record issuance of the bond.
3. Provide a schedule to show interest expense and amortization of the liability over the life of the bond.
4. What financial statement elements would be changed when common shares are issued at maturity? Explain.