At the beginning of 2020 Bradley Company established a stock appreciation rights (SAR) program where executives receive cash at the date of exercise (any time in the next 3 years) for the difference between the market price of the stock and the pre-established price of $15 on 5,000 SARs. The fair value of the SARs on December 31, 2020 is $5. The service period runs for 2 years (2020-2021). The journal entry to be made for 2020 by Bradley Company for the SARs is:

a) Liability Under Stock Appreciation Plan 12,500

Compensation Expense 12,500

b) Compensation Expense 10,000

Additional Paid-in Capital - Stock Appreciation Plan 10,000

c) Additional Paid-in Capital - Stock Appreciation Plan 10,000

Compensation Expense 10,000

d) Compensation Expense 12,500

Liability Under Stock Appreciation Plan 12,500