On November 1, Year 7, Chris Tucker Company adopted a stock-option plan that granted options to key executives to purchase 30,000 shares of the companys $10 par value common stock. The options were granted on January 2, Year 8, and were exercisable two years after the date of grant if the grantee was still an employee of the company. The options expired six years from date of grant. The exercise price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $450,000.

All the options were exercised during Year 10: 20,000 on January 3 when the market price was $67, and 10,000 on May 1 when the market price was $77 a share.

Instructions:

Prepare journal entries relating to the stock option plan for Years 8, 9, and 10. Assume that the employees perform services equally in Years 8 and 9.