12.

On January 1, 2019, Waterway Industries granted Sam Wine, an employee, an option to buy 1,000 shares of Waterway Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5760. Wine exercised his option on October 1, 2021 and sold his 1,000 shares on December 1, 2021. Quoted market prices of Waterway Co. stock in 2021 were:

July 1		$28 per share
October 1		$34 per share
December 1		$38 per share

The service period is for three years beginning January 1, 2021. As a result of the option granted to Wine, using the fair value method, Waterway should recognize compensation expense for 2019 on its books in the amount of

$0.

$5760.

$1440.

$1920.