Following is the shareholders' equity section of the balance sheet of Murphy

Corporation as at December 31, 2019:

Common Shares, unlimited shares

authorized, 800,000 shares issued and

outstanding 12,000,000

Preferred Shares, 100,000 authorized, 60,000

shares issued and outstanding 6,000,000

Contributed surplus from retirement of

common share 120,000

Contributed surplus -- employee stock

options 180,000

Total contributed capital 18,300,000

Accumulated other comprehensive income 150,000

Retained earnings 8,500,000

TOTAL SHAREHOLDERS' EQUITY 26,950,000

Notes: The preferred shares have a $1 dividend rate, are cumulative, and participate in distributions in excess of a 10% dividend on the common shares. No dividends were paid in 2018 or 2019.

The following transactions took place in 2020:

The employee stock options were issued on July 1, 2015, and allow the

employees to acquire 100,000 common shares at a price of $24 per share at any

time between January 1, 2020 and June 20, 2025.

Options for the purchase of 40,000 shares were exercised on July 1, 2020 when the company's common

shares were trading in the market for $30 per share.

On August 1, 40,000 common shares were reacquired at a cost of $28 per share

and were retired.

On September 1, the company issued a ten-year convertible bond with a face

value of $6,000,000 for proceeds of $6,448,000.

The bond was convertible to common shares at the rate of 25 common shares for each $1,000 bond.

A non-convertible debenture with similar terms has a fair value of $5,892,000.

On November 10, after the market closed, the company declared and distributed

a stock dividend on the common shares of 10% .The shares traded for $31.00

when the market opened on the following morning.

The company reported net income of $3,100,000.

Murphy wants to pay a cash dividend of $3

per share to common shareholders.

(Note: when recording the journal entry, determine how much cash would be

needed for the total amount and the amounts to be paid to preferred and

common shareholders)

All conversions and exercises of options are recorded using the book value

method. Murphy Corp follows IRFS.

Required:

(a) Journal entries to record each of the transactions set out above.

(No entry is

required for the interest on the convertible debentures.)

(b) Show the ending balance for the following shareholders' equity accounts at the

end as of December 31, 2020:

Common shares

All contributed surplus accounts

Retained earnings