On January 1, 2021, Sweet Inc. granted stock options to officers and key employees for the purchase of 22,000 shares of the company's $10 par common stock at $25 per share. The options were exercisable within a 5-year period beginning January 1, 2023, by grantees still in the employ of the company, and expiring December 31, 2027. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $366,800. On April 1, 2022, 2.200 options were terminated when the employees resigned from the company. The market price of the common stock was $34 per share on this date. On March 31, 2023, 13,200 options were exercised when the market price of the common stock was $41 per share. Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2021, 2022, and 2023. (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 0 for the amounts.)

On January 1, 2021, Sweet Inc. granted stock options to officers and key employees for the purchase of 22,000 shares of the company's $10 par common stock at $25 per share. The options were exercisable within a 5-year period beginning January 1, 2023, by grantees still in the employ of the company, and expiring December 31, 2027. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $366,800. On April 1, 2022, 2.200 options were terminated when the employees resigned from the company. The market price of the common stock was $34 per share on this date. On March 31, 2023, 13,200 options were exercised when the market price of the common stock was $41 per share. Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2021, 2022, and 2023. (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 0 for the amounts.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2021, Flounder Inc. granted stock options to officers and key employees for the purchase of 24,000 shares of the company's $10 par common stock at $24 per share. The options were exercisable within a 5- year period beginning January 1, 2023, by grantees still in the employ of the company, and expiring December 31, 2027. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $359,400. On April 1, 2022, 2,400 options were terminated when the employees resigned from the company. The market price of the common stock was $34 per share on this date. On March 31, 2023, 14,400 options were exercised when the market price of the common stock was $39 per share. Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2021, 2022, and 2023. (Credit account…
On January 1, 2019, Pepin Company adopts a compensatory share option plan for its 50 executives. The plan allows each executive to purchase 200 shares of its $2 par common stock for $30 per share after completing a 3-year service period. Pepin estimates the value of each option to be $14 on the grant date, and the company expects that 15% of the options will be forfeited and uses this rate in its compensation cost calculations in 2019. At the end of 2021, Pepin determined that the actual turnover was 7 executives for the entire service period. On January 6, 2022, 8 executives exercise their options. Required: 1. Prepare a schedule of Pepin’s compensation computations for its compensatory share option plan for 2019 through 2021. 2. Prepare Pepin’s journal entries for 2019 through 2022 in regard to this plan.
On November 1, 2020, Sarasota Company adopted a stock-option plan that granted options to key executives to purchase 37,500 shares of the company’s $10 par value common stock. The options were granted on January 2, 2021, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $562,500.All of the options were exercised during the year 2023: 25,000 on January 3 when the market price was $66, and 12,500 on May 1 when the market price was $75 a share.Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 2023. (
On January 1, 2026, Waterway Inc. granted stock options to officers and key employees for the purchase of 24,000 shares of the company's $10 par common stock at $24 per share. The options were exercisable within a 5-year period beginning January 1, 2028, by grantees still in the employ of the company, and expiring December 31, 2032. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $359,400. On April 1, 2027, 2,400 options were terminated when the employees resigned from the company. The market price of the common stock was $34 per share on this date. On March 31, 2028, 14,400 options were exercised when the market price of the common stock was $39 per share. Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2026, 2027, and 2028. (List all debit…
On January 1, 2020, ABC Company granted the president compensatory share options to buy 10,000 shares of P100 par value. The options call for a price of P140 per share and are exercisable for four years following the grant date. The president exercised the options on December 31, 2020. The market price of the share was P150 on January 1, 2020 and P180 on December 31, 2020. The fair value of a similar share option with the same terms was P50 on the grant date.What is the compensation expense for 2020?
In order to retain certain key executives, Wildhorse Corporation granted them incentive stock options on December 31, 2024. A total of 152000 options were granted at an option price of $35 per share. Market prices of the stock were as follows: December 31, 2025 December 31, 2026 The options were granted as compensation for executives' services to be rendered over a two-year period beginning January 1, 2025. The Black-Scholes option-pricing model determined total compensation expense to be $1501000. $44 per share 49 per share What amount of compensation expense should Wildhorse recognize as a result of this plan for the year ended December 31, 2025 under the fair value method? O $750500 $1653000 $1501000 $2622950
On January 1, 2024, Jingrong Corporation granted stock options to key employees for the purchase of 81,000 shares of the company's common stock at $28 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2026, by the grantees still in the employ of the company. No options were terminated during 2024, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $34 per share at the date of the grant. Jingrong Corporation used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Jingrong charge to compensation expense for the year ended December 31, 2024? Multiple Choice $405,000 $810,000 $380,700 $761,400
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On January 1, 2018, M Company granted 90,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2020, and expire on January 1, 2024. Each option can be exercised to acquire one share of $1 par common stock for $12. An option-pricing model estimates the fair value of the options to be $5 on the date of grant. If unexpected turnover in 2019 caused the company to estimate that 15% of the options would be forfeited, what amount should M recognize as compensation expense for 2019?
On the first day of 2021, Northrop granted stock options to key employees for the purchase of 86,000 shares of the company's common stock at $27 per share. The options are intended to compensate employees for the next two years. The options are exercisable within a four-year period beginning January 1, 2023, by the grantees still in the employ of the company. No options were terminated during 2021, but the company does have an experience of 6% forfeitures over the life of the stock options. The market price of the common stock was $33 per share at the date of the grant. Northrop used the Binomial pricing model and estimated the fair value of each of the options at $10. What amount should Northrop charge to compensation expense for the year ended December 31, 2021? Multiple Choice $430,000. $404,200. $808,400.
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