On January 1, Year 1, Daters Corp granted options to its new CEO, Peter Jones, to purchase 50,000 shares of $1.00 par value common stock for $30.00 per share. The options are exercisable after December 31, Year 3 and expire on March 31, Year 4. On the grant date, the market price of the stock was $25.00 per share. Using an acceptable valuation model, Daters determined that the options had a fair value of $150,000 on the grant date. The options serve as compensation for services rendered during the first three years.

1. Record the journal entry on the stock options grant date.

2. Record the journal entries for all three years to record compensation expense.

3. Record the journal entry assuming one half of the options are exercised on January 1, Year 4.

4. Record the Journal entry for the expiration of the options not exercised on January 1, Year 4.