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.

Question

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The Answer of 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.

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