Sorrentino Corporation Issued Call Options on 20,000 Shares of BWC

question 7

Essay

Sorrentino Corporation issued call options on 20,000 shares of BWC Inc. on October 21, 2019. These options give the holder the right to buy BWC shares at $35 per share until May 17, 2020. For issuing these options, Sorrentino received $20,000. On December 31, 2019 (Sorrentino's fiscal year-end), the options traded on the Montreal Exchange for $2.00 per option. On May 17, 2020, BWC's share price increased to $38 and the option holders exercised their options. Sorrentino had no holdings of BWC shares.
Required:
For Sorrentino Corporation, record the journal entries related to these call options.

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Definitions:

Sexually Transmitted Infections

Infections typically passed from one person to another through sexual contact, including viruses, bacteria, and parasites.

Fem Cap

is a type of cervical cap used as a contraceptive device, designed to fit over the cervix to block sperm from entering the uterus.

Diaphragm

A barrier method of contraception that is a dome-shaped cup inserted into the vagina to cover the cervix and prevent sperm from entering the uterus.

Spermicide

Substances used to kill sperm, applied inside the vagina as a form of contraception.