Now assume that the market price of Amazon stock on the grant date was $43 per share. Prepare the journal entries for the first year of the stock-option plan. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.)
Now assume that the market price of Amazon stock on the grant date was $43 per share. Prepare the journal entries for the first year of the stock-option plan. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries in the order displayed in the problem statement.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Now assume that the market price of Amazon stock the grant date was $43 per share. Prepare the journal entries for the first
year of the stock-option plan. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is
entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record entries
in the order displayed in the problem statement.)
Date
1/1/25
12/31/25
Account Titles and Explanation
Unearned Compensation
Common Stock
Compensation Expense
Unearned Compensation
Debit
36,980
7,396
Credit
36.
Transcribed Image Text:Assume that Amazon.com has a stock-option plan for top management. Each stock option represents the right
to purchase a share of Amazon $1 par value common stock in the future at a price equal to the fair value of the
stock at the date of the grant. Amazon has 5,300 stock options outstanding, which were granted at the
beginning of 2025. The following data relate to the option grant.
Exercise price for options
Market price at grant date (January 1, 2025)
Fair value of options at grant date (January 1, 2025)
Service period
$42
$42
$6
5 years
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