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On January 2, 2021, options to purchase 27,000 shares were granted to President Don Pedro: 15,000 for services to be rendered in 2021, and 12,000
On January 2, 2021, options to purchase 27,000 shares were granted to President Don Pedro: 15,000 for services to be rendered in 2021, and 12,000 for services to be rendered in 2022. Also on that date, options to purchase 17,000 shares were granted to Vice- President Beatrice Leonato: 8,500 for services to be rendered in 2021, and 8,500 for services to be rendered in 2022. The shares' market value was $ 14 a share on January 2, 2021. The options were exercisable for a period of one year following the year in which the services were rendered. On January 2, 2021, the value of the options was estimated at $400,000. In 2022, neither the president nor the vice-president exercised their options because the shares' market price was below the exercise price. The shares' market value was $7 a share on December 31, 2022, when the options for 2021 services lapsed. On December 31, 2023, both the president and vice-president exercised their options for 12,000 and 8,500 shares, respectively, when the market price was $ 16 a share. The company's year end is December 31. Prepare the necessary journal entries in 2020 when the stock option plan was adopted, in 2021 when the options were granted, in 2022 when the options lapsed, and in 2023 when the options were exercised. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit November 30, 2020 No Entry 0 No Entry 2021 No Entry 0 December 31, 2021 Compensation Expense Contributed Surplus - Stock Options (To record compensation expense attributable to 2021 23,500 options.) December 31, 2022 Compensation Expense Contributed Surplus - Stock Options (To record compensation expense attributable to 2022 20,500 options.) 100 | December 31, 2022 (To record lapse of president's and vice-president's options to buy 23,500 shares.) December 31, 2023 DOO (To record issuance of 20,500 common shares upon exercise of options at $ 8.)
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