Question

- Your answer is partially correct. Larkspur Company adopted a stock-option plan on November 30, 2019, that provided that 70,900 shares of $5 par value stock be designated as available for the granting of options to officers of the corporation at a price of $10 a share. The market price was $13 a share on November 30, 2020. On January 2, 2020, options to purchase 29,700 shares were granted to president Tom Winter-14.200 for services to be rendered in 2020 and 15,500 for services to be rendered in 2021. Also on that date, options to purchase 16,500 shares were granted to vice president Michelle Bennett-8,250 for services to be rendered in 2020 and 8,250 for services to be rendered in 2021. The market price of the stock was $14 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 $4 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 $9 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 15,500 and 8,250 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 Ofor the amounts.) Debit Credit Date Nov. 30,2019 Account Titles and Explanation No Entry No Entry Jan.2.2020 No Entry No Entry (To record options granted to president.) Compensation Expense Dec 31, 2020 89.800 89.800 Paid-in Capital-Stock Options (To record compensation expense attributable to 2020.) Compensation Expense Dec 31, 2021 95,000 95.000 Paid-in Capital-Stock Options (To record compensation expense attributable to 2021.) Paid-in Capital-Stock Options Dec 31, 2021 89.800 89,800 Paid-in Capital-Expired Stock Options (To record lapse of president's and vice president's options.) Cash Dec 31, 2022 237,500 Paid-in Capital-Stock Options 95.000 Common Stock 95.000 237,500 Paid-in Capital in Excess of Par - Common Stock (To record issuance of shares.)

Answer 1

Credit Debit $237.500 $95.000 Date Account Titles and Explanation Dec 31, 2022 Cash Paid in capital-Stock Options Common Stock [(15,500 + 8.250) shares * $5] Paid in capital in Excess of par-Common Stock (To record issuance of shares) $118.750 $213,750 Note: I have only attempted error (red column) figures.