Required:

(a) Prepare the journal entry to record the issue of the convertible notes

(b) Describe the effect, if any, of the issue of the convertible notes on each of the three components of the statement of financial position, that is, assets, liabilities and equity.

Question 4 On 1 November 2018 Sandy Ltd issued 11500 convertible notes with the following features: Face value $1000 Term 4 years Issue price At face value Interest Coupon rate of 13 per cent payable annually in arrears Conversion option Each note is convertible into 115 ordinary shares Market interest rate 15 per cent for similar debt with no conversion option Required: (a) Prepare the journal entry to record the issue of the convertible notes (b) Describe the effect, if any, of the issue of the convertible notes on each of the three components of the statement of nancial position, that is, assets, liabilities and equity