QUESTION $2(8$ marks$)$

On April $1,2024,$ Patrick Ltd$.$ purchased a call option from Fidelity Investments Corporation. The option gave

Patrick the right to buy $5,000$ shares in Monahan Ltd$.$ at a price of $$50$ per share. On the day Patrick purchased the

option, Monahan shares were trading at $$50.$ Patrick paid $$1,000$ for the options. On April $30,2024,$ the Monahan

shares were trading at $$53\mathrm{.}50$ each, and the options for Monahan shares were trading at $$18,000.$ On May $15,$ Patrick

settled the options in cash when the Monahan shares were trading at $$56$ and the options were trading at $$30,000.$

REQUIRED

a$)$ Prepare the journal entries to record the above transactions.

b$)$ Prepare the May $15$ journal entries assuming Patrick accepted the shares in Monahan instead.