1. Prepare the journal entry to record the issuance of the bonds with detachable share warrants on January 1, 2020

2. Are the share options and bonds are included in the calculation of diluted eps? If yes, please calculate per-share effect or diluted eps of each item.

Johnson Company Selected Statement of Financial Position Information December 31, 2020 $125,000 100,000 Equity Share capitalpreference, 6% cumulative, convertible, $50 par, 10,000 shares authorized, 2,500 shares issued and outstanding Share capitalordinary, $1 par, 1,000,000 shares authorized, 100,000 shares issued and outstanding Share premium (includes any amounts for ordinary shares, options, warrants, and conversions) Retained earnings Total equity 400,000 600,000 $1,225,000 Long-term debt Notes payable, 10% Convertible bonds payable Bonds payable, 10% Total long-term debt $100,000 500,000 600,000 $1,200,000 The $600,000 par value 10% bonds were issued with detachable share warrants at 102 on January 1, 2020. One share warrant was issued with each $1,000 par value bond. At the time of issuance, each warrant was selling for $5. If the bonds had no warrants, the company's investment banker determined that they would have been sold at par. The warrants could be exercised to purchase one ordinary share at $25 per warrant. The share options were granted to key executives on January 2, 2017, to purchase 20,000 shares at $15 per share (adjusted for share dividend and share split). The options were exercisable 3 years after the date of grant if the grantee was still an employee of the company. The options expired 5 years from the date of grant. The fair value option-pricing model determined the total compensation cost to be $240,000 at the date of grant. No options were exercised during 2020. Johnson Company Selected Statement of Financial Position Information December 31, 2020 $125,000 100,000 Equity Share capitalpreference, 6% cumulative, convertible, $50 par, 10,000 shares authorized, 2,500 shares issued and outstanding Share capitalordinary, $1 par, 1,000,000 shares authorized, 100,000 shares issued and outstanding Share premium (includes any amounts for ordinary shares, options, warrants, and conversions) Retained earnings Total equity 400,000 600,000 $1,225,000 Long-term debt Notes payable, 10% Convertible bonds payable Bonds payable, 10% Total long-term debt $100,000 500,000 600,000 $1,200,000 The $600,000 par value 10% bonds were issued with detachable share warrants at 102 on January 1, 2020. One share warrant was issued with each $1,000 par value bond. At the time of issuance, each warrant was selling for $5. If the bonds had no warrants, the company's investment banker determined that they would have been sold at par. The warrants could be exercised to purchase one ordinary share at $25 per warrant. The share options were granted to key executives on January 2, 2017, to purchase 20,000 shares at $15 per share (adjusted for share dividend and share split). The options were exercisable 3 years after the date of grant if the grantee was still an employee of the company. The options expired 5 years from the date of grant. The fair value option-pricing model determined the total compensation cost to be $240,000 at the date of grant. No options were exercised during 2020