A. January 1 Purchased and canceled 3,700 common shares for

a. January 1 Purchased and canceled 3,700 common shares for $35.00/share. 

b. January 1 – Issue 1,000 preferred shares at $ 105 per share. 

c. March 31 Declared a 10 % stock dividend on the common shares. The trading price of the stock on that date was $ 45 per share. 

d. April 30 – I * s * s * L the stock dividend. 

e. December 31 Declared a total dividend ( combined for common and preferred shares ) of $ 70,860 for the year. 

f. December 31 – Options were granted to the CEO for 25,000 common shares at an exercise price of $ 48, the current market value. The vesting period is four years from the date of grant. An option pricing model (e.g. Black – Scholes) has determined that the fair value of the options is an aggregate of $ 72,000. These options were granted as a replacement for an annual bonus plan based on a percentage of net income. 

Required 

1. Prepare journal entries to record the transactions that took place during 2021. 75, 000 

2. Prepare the shareholders’ equity section of the Statement of Financial Position at December 31, 2021. Assume 2021 net income was $ 450,000 and comprehensive income was $. 

3. On January 2, 2026 the CEO exercised the stock options. Prepare the journal entry on the exercise date.

 

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