Whispering Company adopted a stock-option plan on November 30, 2024, that provided that 69,000 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $8 a share. The market price was $11 a share on November 30, 2025. On January 2, 2025, options to purchase 25,300 shares were granted to president Tom Winter-14,200 for services to be rendered in 2025 and 11,100 for services to be rendered in 2026. Also on that date, options to purchase 12,200 shares were granted to vice president Michelle Bennett-6,100 for services to be rendered in 2025 and 6,100 for services to be rendered in 2026. The market price of the stock was $14 a share on January 2, 2025. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $4 per option. In 2026, neither the president nor the vice president exercised their options because the market price of the stock was below the exercise price. The market price of the stock was $8 a share on December 31, 2026, when the options for 2025 services lapsed. On December 31, 2027, both president Winter and vice president Bennett exercised their options for 11,100 and 6,100 shares, respectively, when the market price was $17 a share. Prepare the necessary journal entries in 2024 when the stock-option plan was adopted, in 2025 when options were granted, in 2026 when options lapsed, and in 2027 when options were exercised. (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.)
Whispering Company adopted a stock-option plan on November 30, 2024, that provided that 69,000 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $8 a share. The market price was $11 a share on November 30, 2025. On January 2, 2025, options to purchase 25,300 shares were granted to president Tom Winter-14,200 for services to be rendered in 2025 and 11,100 for services to be rendered in 2026. Also on that date, options to purchase 12,200 shares were granted to vice president Michelle Bennett-6,100 for services to be rendered in 2025 and 6,100 for services to be rendered in 2026. The market price of the stock was $14 a share on January 2, 2025. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $4 per option. In 2026, neither the president nor the vice president exercised their options because the market price of the stock was below the exercise price. The market price of the stock was $8 a share on December 31, 2026, when the options for 2025 services lapsed. On December 31, 2027, both president Winter and vice president Bennett exercised their options for 11,100 and 6,100 shares, respectively, when the market price was $17 a share. Prepare the necessary journal entries in 2024 when the stock-option plan was adopted, in 2025 when options were granted, in 2026 when options lapsed, and in 2027 when options were exercised. (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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Whispering Company adopted a stock-option plan on November 30, 2024, that provided that 69,000 shares of $5 par value stock be
designated as available for the granting of options to officers of the corporation at a price of $8 a share. The market price was $11 a
share on November 30, 2025.
On January 2, 2025, options to purchase 25,300 shares were granted to president Tom Winter-14,200 for services to be rendered in
2025 and 11,100 for services to be rendered in 2026. Also on that date, options to purchase 12,200 shares were granted to vice
president Michelle Bennett-6,100 for services to be rendered in 2025 and 6,100 for services to be rendered in 2026. The market
price of the stock was $14 a share on January 2, 2025. The options were exercisable for a period of one year following the year in
which the services were rendered. The fair value of the options on the grant date was $4 per option.
In 2026, neither the president nor the vice president exercised their options because the market price of the stock was below the
exercise price. The market price of the stock was $8 a share on December 31, 2026, when the options for 2025 services lapsed.
On December 31, 2027, both president Winter and vice president Bennett exercised their options for 11,100 and 6,100 shares,
respectively, when the market price was $17 a share.
Prepare the necessary journal entries in 2024 when the stock-option plan was adopted, in 2025 when options were granted, in 2026
when options lapsed, and in 2027 when options were exercised. (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.)
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