Question

Shamrock Company adopted a stock-option plan on November 30, 2019, that provided that 69,000 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $8 a share. The market price was $11 a share on November 30, 2020.

On January 2, 2020, options to purchase 26,500 shares were granted to president Tom Winter—14,000 for services to be rendered in 2020 and 12,500 for services to be rendered in 2021. Also on that date, options to purchase 13,500 shares were granted to vice president Michelle Bennett—6,750 for services to be rendered in 2020 and 6,750 for services to be rendered in 2021. The market price of the stock was $13 a share on January 2, 2020. The options were exercisable for a period of one year following the year in which the services were rendered. The fair value of the options on the grant date was $5 per option.

In 2021, neither the president nor the vice president exercised their options because the market price of the stock was below the exercise price. The market price of the stock was $8 a share on December 31, 2021, when the options for 2020 services lapsed.

On December 31, 2022, both president Winter and vice president Bennett exercised their options for 12,500 and 6,750 shares, respectively, when the market price was $17 a share.

Prepare the necessary journal entries in 2019 when the stock-option plan was adopted, in 2020 when options were granted, in 2021 when options lapsed, and in 2022 when options were exercised. (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
Nov. 30, 2019Jan. 2, 2020Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
Nov. 30, 2019Jan. 2, 2020Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
	(To record options granted to president.)
Nov. 30, 2019Jan. 2, 2020Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
	(To record compensation expense attributable to 2020.)
Nov. 30, 2019Jan. 2, 2020Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
	(To record compensation expense attributable to 2021.)
Nov. 30, 2019Jan. 2, 2020Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022
	(To record lapse of president’s and vice president’s options.)
Nov. 30, 2019Jan. 2, 2020Dec. 31, 2020Dec. 31, 2021Dec. 31, 2022

Answer 1

solution Date Particulars Debtt Gredit Jan 2 2020 No entry Dec 31 2020 103750 103750 compensation expense paid in capital stock option [ 14000 +6750785 [ To record compensation expense for 2020 Compersation expense - poed in capital Stock [ 12500 +6750]x'5 Dec 31 2021 96250 96250 -Option Dec 31, 2021 103750 Dec 31 2023 paid in capital Stock option | 103250 poed in capital from expired Stock options. (To record Lapse of precedent | and vice president options] cash (12500 46750]X8 | paid in Capital Stock option Common stock C 12500 +1500x5 APIC - common stock [To record exercise of Stock option] 154000 96250 96250 154.000