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During its first year of operations, McCollum Tool Works entered into the following transactions relating to shareholders equity. The corporation was authorized to issue 100

During its first year of operations, McCollum Tool Works entered into the following transactions relating to shareholders equity. The corporation was authorized to issue 100 million common shares, $1 par per share.

Jan. 2 Issued 30 million common shares for cash.
3

Entered an agreement with the company president to issue up to 2 million additional shares of common stock in 2017 based on the earnings of McCollum in 2017. If net income exceeds $130 million, the president will receive 1 million shares; 2 million shares if net income exceeds $140 million.

Mar. 31 Issued 4 million shares in exchange for plant facilities.

Net income for 2016 was $132 million.

Prepare the appropriate journal entries to record compensation expense on December 31, 2016, 2017 and 2018. Record the exercise of the options if all of the options are exercised on May 11, 2020, when the market price is $14 per share.

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