A publicly traded company has a stock-based incentive compensation program for its employees. On January 1, 2015, the company granted 120,000 stock options to employees. The $8 exercise price was set to equal the $8 stock price on the grant date. These stock options have a three-year vesting period. The options can be exercised beginning January 1, 2018 and they expire on December 31, 2019. Each option has a grant date fair value of $4, which was determined using the Black-Scholes option pricing model. 100% of the stock options vested.

During 2019, the company's stock price dropped substantially, causing the remaining 15% of the stock options to be out-of-the-money. On December 31, 2019, 15% of the stock options expired out-of-the-money. What is the entry to record the expiration of 15% of the options on December 31, 2019?

A.

Debit: APICStock Options$54,000

Credit: Retained Earnings$54,000

B.

Debit: APICStock Options$72,000

Credit: APICExpired Stock Options$72,000

C.

No journal entry is required.

D.

Debit: APICStock Options$54,000

Credit: APICExpired Stock Options$54,000

E.

Debit: APICStock Options$54,000

Credit: Compensation Expense$54,000