Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option granted would allow an executive to purchase one share of Carmichael’s $10 par valuecommon stock for $40 per share. On January 1, 2020, Carmichael granted the executives 60,000 options. The options were non-transferable and the executive had to remain an employee of the company to exercise the options. The options were exercisable within a 2-year period beginning on January 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $1,200,000.On July 1, 2022, 45,000 options were exercised. Required: Based on the information above, prepare the entries required from January 1, 2020, through July 1, 2022.
Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option granted would allow an executive to purchase one share of Carmichael’s $10 par valuecommon stock for $40 per share. On January 1, 2020, Carmichael granted the executives 60,000 options. The options were non-transferable and the executive had to remain an employee of the company to exercise the options. The options were exercisable within a 2-year period beginning on January 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $1,200,000.On July 1, 2022, 45,000 options were exercised.
Required: Based on the information above, prepare the entries required from January 1, 2020, through July 1, 2022.
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