Question

On January 1, 2016, Riverbed Corporation granted 10,300 options to key executives. Each option wows the executive to purchase one share of Riverbed's $5 par valve common stock at a price of $20 per share. The options were exercisable within a 2-year period beginning January 1, 2018, if the grantee is still employed by the company at the time of the exercise. On the grant date, Riverbed's stock was trading at $26 per share, and a fair value option pricing model determines total compensation to be $413,000 On May 1, 2018, 8,240 options were exercised when the market price of Riverbed's stock was $30 per share. The remaining options lapsed in 2020 because executives dedded not to exercise their options Prepare the necessary Journal entries related to the stock option plan for the years 2016 through 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 for the amounts.) Date Account Titles and Explanation Debit Credit

Answer 1

Answer
Date	Account titles and explanation	Debit	Credit
01/01/2016	No Entry
	No Entry
12-31-2016	Compensation expense	$206,500		413000/2
	Paid - in - capital stock options		$ 2,02,000
	( To record Compensation expense for 2016)
12-31-2017	Compensation expense	$206,500		413000/2
	Paid - in - capital stock options		$ 206,500
	( To record Compensation expense for 2017)
05/01/2018	Cash	$164,800		8240*20
	Paid - in - capital stock options	$330,400		413000*(8240/10300)
	Common stock.		$    41,200	8240*5
	Paid - in - capital in excess of par		$ 454,000
01/01/2020	Paid - in - capital stock options	$ 82,600		413000-330400
	Paid - in - capital expired options		$    82,600
	( To record Paid - in - capital expired options)

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