Question

On November 1, 2020, Sheffield Company adopted a stock-option plan that granted options to key executives to purchase 21,300 shares of the company’s $11 par value common stock. The options were granted on January 2, 2021, 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 $319,500.

All of the options were exercised during the year 2023: 14,200 on January 3 when the market price was $70, and 7,100 on May 1 when the market price was $80 a share.

Prepare journal entries relating to the stock option plan for the years 2021, 2022, and 2023. Assume that the employee performs services equally in 2022 and 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 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
choose a transaction date                                                          Jan. 2, 2021Dec. 31, 2021Dec. 31, 2022Jan. 3, 2023May 1, 2023	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                          Jan. 2, 2021Dec. 31, 2021Dec. 31, 2022Jan. 3, 2023May 1, 2023	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                          Jan. 2, 2021Dec. 31, 2021Dec. 31, 2022Jan. 3, 2023May 1, 2023	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                          Jan. 2, 2021Dec. 31, 2021Dec. 31, 2022Jan. 3, 2023May 1, 2023	enter an account title to record the transaction on January 3, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 3, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 3, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 3, 2020	enter a debit amount	enter a credit amount
choose a transaction date                                                          Jan. 2, 2021Dec. 31, 2021Dec. 31, 2022Jan. 3, 2023May 1, 2023	enter an account title to record the transaction on May 1, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on May 1, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on May 1, 2020	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on May 1, 2020	enter a debit amount	enter a credit amount

Answer 1

2021 34-12- 31-12-1 20221 Answer: Journay Entry pate particulars Debit Credit 2-ot no Entry (Total compensation cost is $319,500) 202 Compensation Expense Alcdr 14159,750 - To paid in capital stock options $159,750 (319,500x5) Being to record Compensation expense for the year 2021) 7 Compensation expense Ale ar $159,750 - To paid in capital stock options 1$ 159,750 (319,500x ) (Being to ruid compensation expense for the year 2022) 3-1012 cash (14,200x40) Ale dr $568,000| paid in Capital stock options Alcor $213,000 (319,500 x 14200/21,300) - To Common Stock (14200x11) |$156,200 To paid in capital excess of par $624,800 (Being to record issuance of 14800 shares of $11 Par value stock upon exerci30 % орботу – оебам со 86 $40) cash (7,100x40) Alear ($284000 paid in capital stock optiony (319,500 × $ 106,500 7100 X 21,300) To common stock (7100x11) $78,100 To paid in capital in excess of par $312,400 Being to record issuance of 7100 shares of $11 par value stock upon exercise of options at option price for $40)