Homeland Corporation is a public company listed on the TSX with a December 31 year end. At the beginning of the current year, there were unlimited common shares authorized with 100,000 issued and outstanding. These shares had a carrying amount of $4 million, and there was $150,000 in retained earnings and $100,000 in contributed surplus (of which $75,000 was created by a net excess of proceeds over cost on a previous cancellation of common shares; the remainder resulted from the issue of compensatory stock options in 2013).
The following transactions took place during the 2014 fiscal year:

January 1 Homeland Corp. issued $5 million of 12%, five-year, convertible bonds, with interest payable annually on December 31. Each $1,000 bond can be converted into 20 common shares. In addition, each $1,000 bond included 10 detachable warrants, where each warrant can be used to purchase one share of common stock at an exercise price of $55. The company intends to use the effective interest amortization method for any bond discount or premium.
Common shares were trading at the time for $45 and a valuator indicated that the warrants had a fair market value of $3. The bond issue with attached warrants sold out at 103. Without the warrants and the conversion rights, the bond issue would have traded at 98.
June 1 By this date, the market price for shares had increased to $55. As a result, 30% of the bonds outstanding were converted into common shares when the market price was $55 per share. The company uses the book value method to record bond conversions.
July 31 50% of the outstanding warrants were exercised when the common shares were trading at $56 per share.
October 1 Homeland Corp. granted 2,000 options to executives in 2013. Each option entitled the holder to purchase one common share for $55 during 2014. These options were valued using an option pricing model at $25,000. On October 1, 2014, 1,200 of the options were exercised when the market price was $58.
December 1 Homeland Corp. purchased and retired 10,000 shares in the open market for $57 per common share.
December 31 The remaining compensatory stock options expired as the executive to whom they had been issued failed to complete his employment contract. The possibility that someone might not complete their employment contract was not taken into account in the option pricing model that was used to determine the value of these stock options.
The net income from operations after tax was $4 million and the tax rate was 25%. The average common share price during 2014 was $52. Income tax expense was $1 million and dividends were paid on December 31 at $2.50 per share.

Instructions
(a) Prepare the appropriate journal entries to record the above transactions.
(b) Prepare any necessary year-end journal entries.
(c) Determine basic and diluted earnings per share, and prepare the presentation of EPS for the income statement.
(d) Complete the statement of shareholders’ equity.