Entry options for (2)Advanced compensationCashCompensation expenseCompensation payableCommon stock at parPaid-in capital-excess of parPaid-in capital-stock optionsEntry options for (3)Advanced compensationCashCompensation expenseCompensation payableCommon stock at parPaid-in capital-excess of parPaid-in capital-stock optionsEntry options for (4)Advanced compensationCashCompensation expenseCompensation payableCommon stock at parPaid-in capital-excess of parPaid-in capital-stock optionsEntry options for (5)Deferred tax assetDeferred tax liabilitiesIncome taxes payableTax benefitTax expenseEntry options for (6)Advanced compensationCashCompensation expenseCompensation payableCommon stock at parPaid-in capital-excess of parPaid-in capital-stock options

F G 4. Record the exercise of the options and their tax effect if all of the options are exercised on March 20, 2031, when the market price per share is $14 WorldStreet, Inc., offers a stock option plan to its regional managers. On January 1, 2026,40 million options were granted for 40 million $1 par common shares. The exercise price is the market price on the grant date, $8 per share. Options cannot be exercised prior to January 1, 2028, and expire December 31, 2032. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. Because the plan does not qualify as an incentive plan, WorldStreet will receive a tax deduction upon exercise of the options equal to the excess million of the market price at exercise over the exercise price. million The income tax rate is 24%. million if you cannot find an appropriate account in the drop down menu, please put your account in the brown color cell. million 1. Determine the total compensation cost pertaining to the stock option plan. 5. Assume the option plan qualifies as an incentive plan. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2026. Type in numbers only. $ million Dr. 2. Prepare the appropriate journal entries to record compensation expense and its tax Cr. effect on December 31, 2026. Dr. million Cr. million million million million million million million million million 6. Prepare the option plan qualifies as an incentive plan, record the exercise million of the options and their tax effect if all of the options are million exercised on March 20, 2031, when the market price per share is $123 Dr. 3. Prepare the appropriate journal entries to record Dr. compensation expense and its tax effect on December 31, 2027. Cr. Cr. Dr . Cr. cr million million million million million million million million