On May 1, 2020 Cedar Landing Inc. (CLI) announced a stock option plan that granted stock options to each of its executives, allowing them to purchase up to 100,000 common shares. The options were granted July 1, 2020 and were exercisable two years after the date they were granted. The option price was set at $25 per share and total compensation expense was estimated to be $880,000. This compensation expense did not take forfeitures into account as all employees were expected to stay with CLI over the two year period. On January 2, 2021, 10,000 options were terminated when one executive resigned from the company. The fair value of CLIs shares at that date was $18 per share. All of the remaining options were exercised during the year 2022; 50,000 on July 1, 2022 when the fair value was $30 a share and 40,000 on August 15 when the fair value was $34 a share. Assume that CLI follows ASPE and accounts for option forfeitures as they occur.

Instructions:

Prepare the journal entries related to the stock option plan for the years 2020, 2021 and 2022. Assume that the employees earn the rights to exercise their options evenly over the two year period and that that the year end is December 31.