1. The following facts relate to Reed-Smith, Inc. 1. On 1/1/17, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares each of common stock at $40 per share. The par value is $10 per share. 2. Also on 1/1/17, options were granted to each of five executives to purchase 30,000 shares each. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 1/1/19. It is assumed that the options were for services performed equally in 2017 and 2018. The Black-Scholes option pricing model determines the total fair value of the options, and thus the total compensation expense, to be $3,200,000. 3. At 1/1/19, four executives exercised their options. Q QUESTION 37 Refer to the prior facts for Reed-Smith, Inc. Assuming the company makes journal entries only once at the end of the year for stock-based compensation expense, the entry for 2018 to record compensation expense related to the options would include: No entry would be made O A debit to Paid-in Capital-Stock Options of $1,600,000 O A credit to Paid-in Capital-Stock Options of $1,600,000 O A credit to Paid-in Capital-Stock Options of $3,200,000