On January 1, 2019, the Julbeth Corporation grants its executives options to purchase 10,000 shares of the companys $1 par common stock at a price of $25 per share. The options are exercisable beginning in two years and expire in four years. The fair value of the options is estimated to be $60,000 based on an appropriate option pricing model.

Required:

1. Create the journal entries to record compensation expense in each applicable year.

2. Create the journal entries to record the exercise of 7,000 options in 2019.

Requirement 1- Entry to record expense for both 12/31/19 and 12/31/20:

Requirement 2 - Entry to record exercise of options: