(a) Barone Corporation issues 3,000 convertible bonds at January 1, 2020. The bonds have a three-year life, and are issued at par with a face value of $1,000 per bond, giving total proceeds of $3,000,000. Interest is payable semi-annually at 6 percent. Each bond is convertible into 250 ordinary shares (par value of $1). When the bonds are issued, the market rate of interest for similar debt without the conversion option is 8%. Required: i.Compute the liability and equity components of the convertible bond, and prepare the journal entry to record its issuance on January 1, 2020. ii.Assume that the bonds were converted on January 1, 2021, and the company paid an additional $50,000 to the bondholders to induce conversion of all the bonds. Prepare the journal entry to record the conversion on January 1, 2021. iii. Ignore (b) above. Assume that the convertible bonds were repurchased on January 1, 2021, for $2,910,000 cash instead of being converted. The fair value of the liability component of the convertible bonds on January 1, 2021, is $2,850,000. Prepare the journal entry to record the repurchase on January 1, 2021. (b) Apart from issuing convertible bond, the shareholders of Barone Corporation adopted a share option plan for top executives whereby each executive might receive rights to purchase up to 12,000 ordinary shares at $4 per share. The par value is $1 per share. On January 1, 2020, options were granted to five executives that allow each person to purchase 12,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on January 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021, The Black-Scholes option pricing model determines total compensation expense to be $130,000. On January 1, 2022, four executives exercised all their options. The fifth executive chose not to exercise his options, which therefore were forfeited. Required: Prepare the necessary journal entries from January 1, 2020 to January 1, 2022 for the above events using the fair value method. If no entry is needed, write "No Entry Necessary."