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On November 1, 2025, Novak 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, 2026, 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 2028: 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 2026, 2027, and 2028. Assume that the employee performs services equally in 2026 and 2027. (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. Do not round intermediate calculations. Round answers to 0 decimal places, eg 5.125. Record entries in the order displayed in the problem statement) Account Titles and Explanation Date DE S BACK 10 Debit Credit

On November 1, 2025, Novak 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, 2026, 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 2028: 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 2026, 2027, and 2028. Assume that the employee performs services equally in 2026 and 2027. (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. Do not round intermediate calculations. Round answers to 0 decimal places, eg 5.125. Record entries in the order displayed in the problem statement) Account Titles and Explanation Date DE S BACK 10 Debit Credit

FINANCIAL ACCOUNTING
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 November 1, 2025, Novak 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, 2026, 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 2028: 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 2026, 2027, and 2028. Assume that the employee performs services equally in 2026 and 2027. (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. Do not round intermediate calculations. Round answers to O decimal places, eg. 5,125. Record entries in the order displayed in the problem statement.) Date Account Titles and Explanation Debit 11070 Credit
Transcribed Image Text:On November 1, 2025, Novak 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, 2026, 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 2028: 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 2026, 2027, and 2028. Assume that the employee performs services equally in 2026 and 2027. (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. Do not round intermediate calculations. Round answers to O decimal places, eg. 5,125. Record entries in the order displayed in the problem statement.) Date Account Titles and Explanation Debit 11070 Credit
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