Problem #2: Accounting for Stock Compensation (8 points) On January 1, 2012, Sonoma Company grants to five of its executive employees', options to purchase 1,000 shares each of the company's $10 par value common stock. The executives may exercise the options at any time within the next 5 years. At the time of issuance, the option price per share is $50, and the market price of the shares $80. The company applies a fair value option-pricing model determine total compensation expense. This pricing model determines that the value of the compensation is $210,000 Assume that the expected period of benefit is three years, starting with the grant date. Record the JE for compensation expense at the end of 1, 2012. Suppose Sonoma's executives exercise 50 percent of the options on January 1, 2016 (four after date of grant), record the journal entry for exercise of the options (show your calculations for this journal): Problem #7: Using the Percentage Completion Method (10 points) Guerreros' Building Company was contracted to build some luxury homes for The Home Seller Company of Belize (over a three-year period). The following information pertaining to this long-term contract is given below: Contract Price Estimated Total Cost of Project: Cost Incurred Current Year Estimated Cost to Complete Billings to Customer Current Y. Cash Receipts from Customer Current 2019 2020 2021 $1,012.500 51,012.00 1,012.500 $900,000 $900.000 $900.000 $225,000 $429,000 S246,000 5675,000 $246,000 S202.500 $540,000 $270,000 $168,750 $393.750 $450,000 Required: Calculate the Gross Profit to be recognized for each year using the grid below (round the % to two decimal places): 2019 2020 2021 Cost Incurred to Date Estimated Cost to Complete Estimated Total Contract Cost Estimated Percent Complete fround to nede Contract Price Revenue Recognizable Revenue Recognized Prior Year Revenue Recognized Currently Costs incurred Currently Gross Profil Recognized