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 2018, the employees exercised 85% of the stock options when the market price of the company's $1 par value common stock was $10 (the other employees were hoping the stock price would increase further, so 15% of the stock options remained unexercised in 2018). What is the appropriate journal entry to record the exercise of 85% of the stock options during 2018?

A.

Debit: Cash$816,000

Debit: APICStock Options$408,000

Credit: Common Stock$120,000

Credit: APIC in Excess of ParCommon$1,104,000

B.

No journal entry is required.

C.

Debit: Cash$120,000

Debit: APICStock Options$102,000

Credit: Common Stock$120,000

Credit: APIC in Excess of ParCommon$102,000

D.

Debit: Cash$816,000

Debit: APICStock Options$408,000

Credit: Common Stock$102,000

Credit: APIC in Excess of ParCommon$1,122,000

E.

Debit: Cash$408,000

Debit: APICStock Options$102,000

Credit: Common Stock$102,000

Credit: APIC in Excess of ParCommon$408,000