On January 1, 2026, Metlock 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 $26 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 $356,600. On April 1, 2027,2,200 options were terminated when the employees resigned from the company. The market price of the common stock was $35 per share on this date. On March 31, 2028, 13,200 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 entries before credit entrics

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2026, Metlock 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 $26 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 $356,600.
On April 1, 2027,2,200 options were terminated when the employees resigned from the company. The market price of the common
stock was $35 per share on this date.
On March 31, 2028, 13,200 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 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
Account Titles and Explanation
1. 1, 2026
No Entry
No Entry
c. 31, 2026 #
Compensation Expense
Paid-in Capital-Stock Options
ril 1, 2027
Paid-in Capital-Stock Options
Compensation Expense
c. 31, 2027 +
Compensation Expense
Paid-in Capital-Stock Options
Mar. 31, 2028
Cash
Paid-in Capital-Stock Options
Common Stock
Paid-in Capital in Excess of Par - Common Stock
Debit
0
178300
35660
142640
343200
Credit
178300
35660
142640
1100400
1452000
1425000
0
Transcribed Image Text:On January 1, 2026, Metlock 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 $26 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 $356,600. On April 1, 2027,2,200 options were terminated when the employees resigned from the company. The market price of the common stock was $35 per share on this date. On March 31, 2028, 13,200 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 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 Account Titles and Explanation 1. 1, 2026 No Entry No Entry c. 31, 2026 # Compensation Expense Paid-in Capital-Stock Options ril 1, 2027 Paid-in Capital-Stock Options Compensation Expense c. 31, 2027 + Compensation Expense Paid-in Capital-Stock Options Mar. 31, 2028 Cash Paid-in Capital-Stock Options Common Stock Paid-in Capital in Excess of Par - Common Stock Debit 0 178300 35660 142640 343200 Credit 178300 35660 142640 1100400 1452000 1425000 0
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