Financial Instruments (F7 Past Paper Q-2018)

Hi, this question is part of a question in section C which i am getting confused with.. In the SFP for YE 30 June X8 the converible shares stand at 5m. Duggan Co issued $5m 6% convertible loan notes on 1 July 20X7. Interest is payable annually in arrears. These bonds can be converted into one share for every $2 on 30 June 20X9. Similar loan notes, without conversion rights, incur interest at 8%. Duggan Co recorded the full amount in liabilities and has recorded the annual payment made on 30 June 20X8 of $0·3m in finance costs. Relevant discount rates are as follows: Present value of $1 in: 6% 8% 1 year 0·943 0·926 2 years 0·890 0·857 My answer.. (end the YE June x8) Interest (5m x 6% x 0.926) = 277,800 Liability element (5m x 0.926) = 4,630,000 Equity (Balancing Figure) = 92,200 Proceeds of loan notes = 5,000,000 The books answer.. Year ended 30 June 20X8 300 0·926 278 Year ended 30 June 20X9 5,300 0·857 4,542 Liability element 4,820 The equity element is therefore $180,000, to be shown in the statement of changes in equity. Interest needs to be applied to the liability element. $4,820 x 8% = $386,000. As $300,000 has been recorded, an adjustment of $86,000 is required. Can you please tell me where i am going wrong? sorry.