Chapter 19, Problem 19.6E

(1)

To determine

Stock options: Stock options are the stock-based compensation plans provided in the form of an option to buy certain number of shares for a certain price during certain period.

To determine: The compensation cost of stock options

(2)

To determine

To prepare: Journal entry for the stock options awarded on January 1, 2018

(3)

To determine

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

To journalize: The entry for compensation expense on December 31, 2018

(4)

To determine

To journalize: The entry for compensation expense on December 31, 2019