The shareholders' equity section of Sheridan Inc. at the beginning of the current year is as follows: Common shares, 1,000,000 shares authorized, 300,000 shares issued and outstanding $3,600,000 Retained earnings 570,000 During the current year, the following transactions occurred: 1. The company issued 102,000 rights to the shareholders. Ten rights are needed to buy one share at $31 and the rights are void after 30 days. The shares' market price at this time was $33 per share. 2. The company sold the public a $204,000, 10% bond issue at par. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common shares at $30 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8. 3. All but 10,000 of the rights issued in item 1 were exercised in 30 days. 4. At the end of the year, 80% of the warrants in item 2 had been exercised, and the remaining were outstanding and in good standing. 5. During the current year, the company granted stock options for 5,000 common shares to company executives. The company, using an options pricing model, determined that each option is worth $10. The exercise or strike price is $30. The options were to expire at year end and were considered compensation for the current year. 6. All but 1,000 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. Part 1 Your answer is partially correct. Prepare general journal entries for the current year to record each of the transactions. Assume the company follows IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit 1. No Entry 336,600 No Entry 336,600 2. Cash 204,000 Bonds Payable 195,840 Contributed Surplus - Stock Warrants 8,160 3. Cash 285,200 Common Shares 285,200 4. Contributed Surplus - Stock Warrants 6,528 Cash 48,960 Common Shares 55,488 5. Compensation Expense 50,000 Contributed Surplus - Stock Options 50,000 6. For options exercised: Cash 120,000 Contributed Surplus - Stock Options 40,000 Common Shares 160,000 For options lapsed: Contributed Surplus - Stock Options 10,000 Compensation Expense 10,000 e Textbook and Media Assistance Used List of Accounts Attempts: 2 of 2 used Part 2 Your answer is partially correct. Prepare the shareholders' equity section of the SFP at the end of the current year. Assume that retained earnings at the end of the current year is $750,000. (Enter account name only and do not provide descriptive information.) Sheridan Inc. (Partial) Balance Sheet Shareholders' Equity: Share Capital V: Common Shares $ 4,100,688 Contributed Surplus - Stock Warrants 1,632 4,102,320 Retained Earnings 570,000 Total Shareholders' Equity $ 4,672,320 e Textbook and Media List of Accounts Save for Later Attempts: 1 of 2 used Submit