On January 2, 2017, Dwyer Corporation granted 10,000 nonqualified stock options each to four of its key executives (40,000 options in total). Under the terms of the option plan, upon exercise, each executive will pay the exercise price of $10 per share of common stock ($1 par value). The options were exercisable after January 1, 2020, and the executives were required to be employees of Dwyer at the date of exercise. The Black-Scholes value of the option on the grant date is $12.50. Three employees exercised options for 30,000 shares of stock on January 2, 2021. Dwyer has a tax rate of 35% in all years. Relevant dates and stock prices are as follows: January 2, 2017 December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 January 2, 2021 December 31, 2021 Required: 1. Prepare the compensation expense and related tax journal entries from 2017 to 2019. 2. Prepare the journal entries required to record the stock option exercise on January 2, 2021. Include the journal entries to record the tax effects. 3. Prepare a schedule to show how the January 2, 2021, option exercise affects Dwyer's 2021 income tax expense. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the journal entries required to record the stock option exercise on January 2, 2021. Include the journal entries to record the tax effects. Round answers to the nearest dollar. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Round answers to the nearest dollar.) View transaction list Journal entry worksheet 2 3 Prepare the entry to record the exercise of the options. Note: Enter debits before credits. Transaction General Journal Debit Credit 01 Journal entry worksheet