$($Entries for Various Dilutive Securities$)$ The stockholders$$ equity section of

Whaler Inc. at the beginning of the current year appears below.

Common stock, $$1$ par value, authorized $5,000,000$

shares, $800,000$ shares issued and outstanding $ $800,000$

Paid$-$in capital in excess of par$$common stock $16,100,000$

Retained earnings $260,000$

During the current year, the following transactions occurred:

$1.$ The company issued to the stockholders $500,000$ rights. Ten rights are needed to buy one share of

stock at $$21.$ The rights were void after $30$ days. The market price of the stock at this time was $$22$

per share.

$2.$ The company sold to the public a $$1,000,000,6\%$ bond issue at $106.$ The company also issued

with each $$1,000$ bond two detachable stock purchase warrants, which provided for the purchase of

common stock at $$19$ per share. Shortly after issuance, similar bonds without warrants were selling

at $97$ and the warrants at $$4\mathrm{.}50.$

$3.$ All but $75,000$ of the rights issued in $(1)$ were exercised in $30$ days.

$4.$ At the end of the year, $60\%$ of the warrants in $(2)$ had been exercised, and the remaining were outstanding and in good standing.

$5.$ During the current year, the company granted stock options for $125,000$ shares of common stock to

company executives. The company, using a fair value option$-$pricing model, determines that each

option is worth $$2\mathrm{.}60.$ The option price is $$27.$ The options were to expire at year$-$end and were

considered compensation for the current year.

$6.$ All but $20,000$ shares related to the stock$-$option plan were exercised by year$-$end. The expiration

resulted because one of the executives failed to fulfill an obligation related to the employment

contract.

Instructions

a$.$ Prepare general journal entries for the current year to record the transactions listed above.

b$.$ Prepare the stockholders$$ equity section of the balance sheet at the end of the current year. Assume

that retained earnings at the end of the current year is $$467,000.$