Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar.) The December 31, 2018 balance sheet of Wolfe Co. included the following items: 7.5% bonds payable due December 31, 2026 $3,000,000 Unamortized discount on bonds payable 120,000 The bonds were issued on December 31, 2016 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.)

On April 1, 2016, Wolfe retired $600,000 of these bonds at 101 plus accrued interest.

Prepare the necessary entries from 1/1/17-2/1/19 for the following events using the fair value method. If no entry is needed, write "No Entry Necessary."

1.On 1/1/17, the stockholders adopted a stock option plan for top executives whereby each might receive rights to purchase up to 30,000 shares of common stock at $40 per share. The par value is $10 per share.

2.On 2/1/17, options were granted to each of five executives to purchase 30,000 shares. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on 2/1/19. It is assumed that the options were for services performed equally in 2017 and 2018. The Black-Scholes option pricing model determines total compensation expense to be $3,200,000.

3.At 2/1/19, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.