On November 1, 2022, Sheffield Inc. adopted a stock-option plan that granted options to key executives to purchase 38,500 shares of the company's common shares. The options were granted on January 2, 2023, 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 $455,000. All of the options were exercised during the year 2025: 21,400 on January 3 when the market price was $67, and 17,100 on May 1 when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2023, 2024, and 2025. Assume that the employee performs services equally in 2023 and 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.

On November 1, 2022, Sheffield Inc. adopted a stock-option plan that granted options to key executives to purchase 38,500 shares of the company's common shares. The options were granted on January 2, 2023, 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 $455,000. All of the options were exercised during the year 2025: 21,400 on January 3 when the market price was $67, and 17,100 on May 1 when the market price was $77 a share. Prepare journal entries relating to the stock option plan for the years 2023, 2024, and 2025. Assume that the employee performs services equally in 2023 and 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter15: Shareholders’ Equity: Capital Contributions And Distributions

Section: Chapter Questions

Problem 29P

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