Exercise 16-10 Date Account Titles and Explanation Debit Credit 1/2/15 12/31/15

Question

Exercise 16-10

Date

Account Titles and Explanation

Debit

Credit

1/2/15

12/31/15

12/31/16

1/3/17

5/1/17

Exercise 16-10

Your answer is partially correct. Try again. On November 1, 2014, Olympic Company adopted a stock-option plan that granted options to key executives to purchase 50,000 shares of the company’s $14 par value common stock. The options were granted on January 2, 2015, 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 $772,500.

All of the options were exercised during the year 2017: 37,500 on January 3 when the market price was $68, and 12,500 on May 1 when the market price was $79 a share.

Prepare journal entries relating to the stock-option plan for the years 2015, 2016, and 2017. Assume that the employee performs services equally in 2015 and 2016. (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 amounts.)

Date

Account Titles and Explanation

Debit

Credit

1/2/15

12/31/15

12/31/16

1/3/17

5/1/17

Explanation / Answer

Journal entries:

Date Accounts Title Debit $ Credit $ 1/2/15 No entry on the grant date 12/31/15 Compensation expenses 386250 Additional paid in capital - stock options 386250 12/31/16 Compensation expenses 386250 Additional paid in capital - stock options 386250 1/3/17 Cash 920625 Additional paid in capital - stock options 579375 Common Stock 525000 Additional paid in capital - common stock 975000 5/1/17 Cash 306875 Additional paid in capital - stock options 193125 common stock 175000 Additional paid in capital - common stock 325000

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.