Question

On November 1, 2017, Ayayai Company adopted a stock-option plan that granted options to key executives to purchase 24,300 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 $50, and the fair value option-pricing model determines the total compensation expense to be $364,500.

All of the options were exercised during the year 2020: 16,200 on January 3 when the market price was $66, and 8,100 on May 1 when the market price was $75 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 enter 0 for the amounts. Round intermediate calculations to 5 decimal places, e.g. 1.24687 and final answers to 0 decimal places, e.g. 5,125.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2, 2018Dec. 31, 2018Dec. 31, 2019Jan. 3, 2020May 1, 2020
Jan. 2, 2018Dec. 31, 2018Dec. 31, 2019Jan. 3, 2020May 1, 2020
Jan. 2, 2018Dec. 31, 2018Dec. 31, 2019Jan. 3, 2020May 1, 2020
Jan. 3, 2020
May 1, 2020

Answer 1

10/31/19 1 1/2/18 No Entry / Total compensation cost is $364800) 12/31/18 Compensation Expense s $182250 Frid -in - Capital . Hock options $182370. [ o rected compensation Expense for 2018 (12 * 364500) Compensation Expense ............ $ 1822.50 poud-in-capital - Stock options $ 182258 [to recad compensation Exp for 2019 (10 4 364500] 1/3/2020 Cash ( 16200 x 50) ............ $810000 paid in Capital - Stock options .... $24 3 000 ( 364 500x 16 2007 20300) Common Stock 16 200x10) $ 162000 I paid in capital in Ercen of par $ 891000 (To read d inuance of 16200 Shares of $10 por value upon Everese of options at option price $50). 570/2020 Cash ( 8100 * 50) ...... .. 465000 paid in capital - Stock options .... 121500 ( 364 500x 8109/24300) fommon Stocle ............ 81000 paid in capital in Exces of pas .... 5500 (o record issuance of 8100 shares at $10 por vatue Stock cepon Exercise of options at option price at $80).