1 July 2018, Parade Ltd issues 2.000 convertible notes. The notes have a three year term and are issued at par with a face value of $1,000 per note, giving total proceeds at the date of issue of $2,000,000. The notes pay interest at 4% p.a. annually in arrears. The holder of each note is entitled to convert the note into 250 ordinary shares of Parade Ltd at contract maturity. When the notes are issued, the prevailing market interest rate for similar debt (similar term, similar credit status of issuer and similar cash flows) without conversion options is 8% pa. Hence at the date of issue: Present value of the principal: $2 million payable in 3 years' time: Present value of the interest: $80,000 ($2,000,000 4%) payable annually in arrears for 3 years Total contractual cash flows $1,587,664 206.168 $1,793,832 Prepare the journal entries of Parade Ltd to account for the convertible notes for each year ending 30 June under the following circumstances.