Information: At the date of incorporation, the company had issued 2,000,000 common shares for $10 per share. On February 1, 2021, 20,000 of the shares were repurchased and cancelled by the company. The controller included the $1 million cost of this repurchase in operating expenses. The company had issued a call option in 2020, expiring in 2022 and allowing the holder to purchase 40,000 shares for $40 per share. The average share price in 2020 was $51.

Question: What journal entry was recorded and what journal entry should have been recorded instead?