Question

On January 1, 2018, Riverbed 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 $26 per share. The options were exercisable with in a 5-year period beginning January 1, 2020, by grantees still in the employ of the company, and expiring December 31, 2024. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $324,400. On April 1, 2019, 2,300 options were terminated when the employees resigned from the company. The market price of the common stock was $36 per share on this date. On March 31, 2020, 13,800 options were exercised when the market price of the common stock was $40 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, 2018, 2019, and 2020. (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.) Account Titles and Explanation Date Debit Credit Mar. 31, 2020

Answer 1

Date	Account title and explanation	Debit($)	Credit($)
Jan1 ,2018	No entry
Dec 31 ,2018	Compensation expense (324,400/2)	162,200
	Paid in capital- stock option		162,200
April,1 2019	Paid in capital stock	16220
	Compensation expense (162200*2300*23000)		16220
Dec 31, 2019	Compensation expense	145980
	Paid in capital- stock option		145980
	(324400/2)20700/23000
March 31,2020	cash (13800*26)	358,800
	paid in capital- stock (324,400*13800/23000)	194640
	common stock(13800*10)		138000
	Paid in capital in excess of par		415,440