Boost Corporation is authorized to issue $30,000$ shares of common stock, $$1$ par, of which $16,000$ are outstand$-$

ing; issue price $$8$ per share. On January $1$ of Year $1,$ the company initiated a stock incentive plan for many

employees. The plan provides for each qualified executive to receive options for $200$ shares of the common

stock. Subject to continued employment, the option is exercisable at any time after four years and prior to ex$-$

piration, which is five years from the date of grant. The options are nontransferable, and the specified exercise

price for the options is to be set equal to the grant date market price of the stock. The option is compensation,

and any compensation cost is to be prorated equally for the period from the date of grant to the first exercise

$($vesting$)$ date, which is four years or the requisite service period. The company's policy is to record forfeitures

as incurred.

On January $1$ of Year $1,10$ employees were each granted options to acquire $200$ shares $($per employee$)$ un$-$

der the plan when the market price of the stock was $$30.$ The Black$-$Scholes option$-$pricing model is used, with

estimates provided by management, to compute the fair value of an option. The fair value at the grant date of the

options is $$30,000.$

All vested options are exercised just prior to their expiration on December $28$ of Year $5,$ when the market

price of the stock was $$50$ per share.

Required

a$.$ Prepare the entry to record compensation cost for $(1)$ Year $1$ and $(2)$ Year $2.$

b$.$ At December $31$ of Year $3,$ there are $2$ grantees no longer employed by the company. Prepare the entry to

record compensation costs for Year $3.$

c$.$ Record the entry for the exercise of all remaining vested options on December $28$ of Year $5.$