Practice Exercises - Stock Options On November 1, 2020, Pronghorn Company adopted a stock-option plan that granted options to key executives to purchase 38,100 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 $571,500. All of the options were exercised during the year 2023: 25,400 on January 3 when the market price was $67, and 12,700 on May 1 when the market price was $76 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. General Journal Debit Credit 4.

Practice Exercises - Stock Options On November 1, 2020, Pronghorn Company adopted a stock-option plan that granted options to key executives to purchase 38,100 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 $571,500. All of the options were exercised during the year 2023: 25,400 on January 3 when the market price was $67, and 12,700 on May 1 when the market price was $76 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. General Journal Debit Credit 4.

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, 2020, Prospero Games Inc. granted stock options to managers and key employees under which the managers and employees could purchase shares of the company for $35. Prospero set aside 40,000 shares for this purpose. The options are exercisable within a four-year period beginning January 1, 2022 by employees still with the company, and the options expire on December 31, 2025. The estimated value of the options on January 1, 2020 is $4.50 per share. On January 10, 2022, 16,000 of the options were exercised when the stock price was $44. On December 17, 2022, an additional 10,000 of the options were exercised when the stock price was $48. No further stock options were exercised. Required: Prepare all the journal entries required between January 1, 2020 and December 31, 2025.
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1.On January 1, 2019, a company granted 100,000 options to key executives. Each option allows the executive to purchase one share of the company's $14 par value common stock at a price of $44 per share. The options were exercisable within a 2-year period beginning January 1, 2022. On the grant date, a fair value option-pricing model determines total compensation to be $800,000. On January 1, 2022, 1,000 options were exercised. In the journal entry to record the exercise, how much should be recorded for Paid-in Capital in Excess of Par – common stock? 2.A company issued 13,000 shares of $22 par value common stock upon conversion of 24,000 shares of $34 par value preferred stock. The preferred stock was originally issued at $43 per share. The common stock is trading at $22 per share at the time of conversion. In the journal entry to record the conversion of the preferred stock, how much should we record for Paid-in Capital in Excess of Par - common stock?
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On January 1, 2019, Flounder Corporation granted 9,400 options to key executives. Each option allows the executive to purchase one share of Flounder’s $5 par value common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2021, if the grantee is still employed by the company at the time of the exercise. On the grant date, Flounder’s stock was trading at $26 per share, and a fair value option-pricing model determines total compensation to be $404,000.On May 1, 2021, 7,520 options were exercised when the market price of Flounder’s stock was $30 per share. The remaining options lapsed in 2023 because executives decided not to exercise their options.Prepare the necessary journal entries related to the stock option plan for the years 2019 through 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…
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On November 1, 2017, Marigold Company adopted a stock-option plan that granted options to key executives to purchase 21,000shares of the company’s $10 par value common stock. The options were granted on January 2, 2018, 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 $39, and the fair value option-pricing model determines the total compensation expense to be $309,000. All of the options were exercised during the year 2020: 5,250 on January 3 when the market price was $66, and 15,750 on May 1 when the market price was $78 a share. Prepare journal entries relating to the stock option plan for the years 2018, 2019, and 2020. Assume that the employee performs services equally in 2018 and 2019. (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…
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Practice Exercises - Restricted Stock 1. Studymore Company issues 4,400 shares of restricted stock to its CFO, Dane Nowork, on January 1, 2020. The stock has a fair value of $123,000 on this date. The service period related to this restricted stock is 4 years. Vesting occurs if Nowork stays with the company for 4 years. The par value of the stock is $5. At December 31, 2021, the fair value of the stock is $133,000. Prepare the journal entries to record the restricted stock on January 1, 2020 (the date of grant), and December 31, 2021. On March 4, 2022, Nowork leaves the company. Prepare the journal entry to account for this forfeiture. General Journal Debit Credit ASH ENC INT