On November 1, 2022, Crane Corp. adopted a stock option plan that granted options to key executives to purchase 49,800 common shares. The options were granted on January 2, 2023, and were exercisable two years after the date of grant if the grantee was still a company employee; the options expire six years from the date of grant. The option price was set at $37, and total compensation expense was estimated to be $522,000. Note that the calculation did not take forfeitures into account. On April 1, 2024, 3,900 options were terminated when some employees resigned from the company. The fair value of the shares at that date was $25. All of the remaining options were exercised during the year 2025: 34,900 on January 3 when the fair value was $47, and 11,000 on May 1 when the fair value was $53 a share. Assume that the entity follows ASPE and has chosen not to reflect forfeitures in its upfront estimate of compensation expense. (a) Prepare journal entries relating to the stock option plan for the years 2023, 2024, and 2025. Assume that the employees perform services equally in 2023 and 2024, and that the year end is December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Round answers to 0 decimal places, e.g. 5,275. Do not round intermediate calculations.)

Taxon Corp. granted stock options representing the right to purchase 30 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. After the recipients of the options satisfy the vesting requirement, the company will allow executives to trade those options. The options had a market price of $8 per share on the grant date. Currently (as of the reporting date) the market price of the options are $24 per share. Ignoring taxes, what is the effect on earnings in the year that the shares are granted to executives? A) $0. B) $30 million. C) $80 million. D) $240 million. O A O B O D

On November 1, 2025, Columbo Company adopted a stock-option plan that granted options to key executives to purchase 30,000 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 $450,000. All of the options were exercised during the year 2029: 20,000 on January 3 when the market price was $67, and 10,000 on May 1 when the market price was $77 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…

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…

On January 1, 2024, Sherwood Company granted 97,000 stock options to certain executives. The options are exercisable no sooner than December 31, 2026, and expire on January 1, 2030. Each option can be exercised to acquire one share of $1 par common stock for $8. An option-pricing model estimates the fair value of the options to be $3 on the date of grant. If unexpected turnover in 2025 caused the company to estimate that 15% of the options would be forfeited, what amount should Sherwood recognize as compensation expense for 2025?

Pastore Incorporated granted options for 1 million shares of its $1 par common stock at the beginning of the current year. The exercise price is $31 per share, which was also the market value of the stock on the grant date. The fair value of the options was estimated at $9.00 per option. What would be the total compensation indicated by these options?

On November 1, 2017, Windsor Company adopted a stock-option plan that granted options to key executives to purchase 19,000 shares 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 $40, and the fair value option-pricing model determines the total compensation expense to be $328,000. All of the options were exercised during the year 2020: 4,750 on January 3 when the market price was $67, and 14,250 on May 1 when the market price was $77 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…

On January 1, 2021, Sarasota Inc. granted stock options to officers and key employees for the purchase of 23,000 shares of the company’s $10 par common stock at $27 per share. The options were exercisable within a 5-year period beginning January 1, 2023, by grantees still in the employ of the company, and expiring December 31, 2027. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $359,400.On April 1, 2022, 2,300 options were terminated when the employees resigned from the company. The market price of the common stock was $35 per share on this date.On March 31, 2023, 13,800 options were exercised when the market price of the common stock was $41 per share.Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2021, 2022, and 2023. (Credit account titles…

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…

On January 1, 2024, Swifty Corporation granted 9,100 options to key executives. Each option allows the executive to purchase one share of Swifty's $5 par value common stock at a price of $21 per share. The options were exercisable within a 2-year period beginning January 1, 2026, if the grantee is still employed by the company at the time of the exercise. On the grant date, Swifty's stock was trading at $26 per share, and a fair value option-pricing model determines total compensation to be $402,000. On May 1, 2026, 7,280 options were exercised when the market price of Swifty's stock was $30 per share. The remaining options lapsed in 2028 because executives decided not to exercise their options. Prepare the necessary journal entries related to the stock option plan for the years 2024 through 2028. (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…