The stockholders equity section of Sheridan Inc. at the beginning of the current year appears below.

Common stock, $10 par value, authorized 1,043,000 shares, 321,000 shares issued and outstanding		$3,210,000
Paid-in capital in excess of parcommon stock		562,000
Retained earnings		624,000

During the current year, the following transactions occurred.

1.		The company issued to the stockholders 109,000 rights. Ten rights are needed to buy one share of stock at $30. The rights were void after 30 days. The market price of the stock at this time was $32 per share.
2.		The company sold to the public a $204,000, 10% bond issue at 104. The company also issued with each $100 bond one detachable stock purchase warrant, which provided for the purchase of common stock at $28 per share. Shortly after issuance, similar bonds without warrants were selling at 96 and the warrants at $8.
3.		All but 5,450 of the rights issued in (1) were exercised in 30 days.
4.		At the end of the year, 80% 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 10,800 shares of common stock to company executives. The company, using a fair value option-pricing model, determines that each option is worth $10. The option price is $28. The options were to expire at year-end and were considered compensation for the current year.
6.		All but 1,080 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.

Journal entries

S.No	Account Titles	Debit	Credit
1	No entry
2	Cash ($204000 104/100)	$212,160
	Discount on bonds payable [$204,000 - [(96/(96+8)) $212,160]	$8,160
	Bonds payable		$204,000
	Paid-in Capital-stock warrants [(8/(96+8)) $212,160]		$16,320
3	Cash [((109,000-5450) 10) $30]	$310,650
	Common stock [((109,000-5450) 10) $10]		$103,550
	Paid-in capital in excess of par		$207,100
4	Paid-in capital -stock warrants ($16320 80% )	$13,056
	Cash [(($204,000 100) 80%) $28]	$45,696
	Common stock [((204000 100) 80%) $10]		$16,320
	Paid-in capital in excess of par		$42,432
5	Compensation expense (10800 $10)	$108,000
	Paid-in capital-stock options		$108,000
6	For options exercised
	Cash (10800 - 1080) $28	$272,160
	Paid-in capital-stock options (108000 90%)	$97,200
	Common stock		$97,200
	Paid-in capital in excess of par		$272,160
	For options lapsed
	Paid-in capital-stock options (108000 10%)	$10,800
	Compensation expense		$10,800

(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 $771,000. Sheridan Inc. Balance Sheet %24