Answer:
2021 No entry
The total compensation cost is the amount of $477,000
2021
Dr Compensation Expense 238,500
Cr Paid-in Capital- Stock Options 238,500
2022
Dr Compensation Expense 238,500
Cr Paid-in Capital- Stock Options238,500
1/3/2023
Dr Cash 848,000
Dr Paid-in capital - Stock Options 318,000
Cr Common Stock 190,800
Cr Paid-in Capital in Excess of par 975,200
5/1/2023
Dr Cash 424,000
Dr Paid-in Capital - Stock Options 159,000
Cr Common Stock 95,400
Cr Paid-in Capital in Excess of Par 487,600
Explanation:
Preparation of the journal entries relating to the stock option plan for the years 2021, 2022, and 2023.
2021 No entry
The total compensation cost is the amount of $477,000
2021
Dr Compensation Expense 238,500
Cr Paid-in Capital- Stock Options 238,500
(1/2 * $477,000)]
(Being To record compensation expense for 2021)
2022
Dr Compensation Expense 238,500
Cr Paid-in Capital- Stock Options238,500
(1/2 * $477,000)
(Being To record compensation expense for 2022)
1/3/2023
Dr Cash 848,000
(21,200 * $40)
Dr Paid-in capital - Stock Options 318,000
($477,000 *(21,200/31,800))
Cr Common Stock 190,800
(21,200 * $9)
Cr Paid-in Capital in Excess of par 975,200
[848,000+318,000-(190,800)]
(Being To record issuance of 21,200 shares of $9 par value stock upon exercise of option price set at $40)
5/1/2023
Dr Cash 424,000
(10,600 *$40)
Dr Paid-in Capital - Stock Options 159,000
($477,000 * (10,600/31,800))
Cr Common Stock 95,400
(10,600*$9)
Cr Paid-in Capital in Excess of Par 487,600
[424,000+159,000-(95,400)]
(Being To record issuance of 10,600 shares of $9 par value stock upon exercise of option price set at $40)
