Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option

granted would allow an executive to purchase one share of Carmichaels $10 par value

common stock for $40 per share.

On January 1, 2020, Carmichael granted the executives 60,000 options. The options were non-transferable and the executive had to remain an employee of the company to exercise the options. The options were exercisable within a 2-year period beginning on January 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $1,200,000.

On July 1, 2022, 45,000 options were exercised.

Required: Based on the information above, prepare the entries required from January 1, 2020, through July 1, 2022.