Problem I need help with:

Assume that Zurich Corp. issued 50,000 stock options on January 1, 2022. Each option was for the right to purchase 1 share of $1 par common stock at $35 per share (the market price of the shares on the issue date). At the issuance date, the options fair value was $8 per option. The options have a 4-year vesting period and a 10-year life.

Questions to be answered:

1. Prepare the entry to recognize 2022s compensation expense related to the options granted.

2. Assume that the average market price of Zurich Corp.s common stock was $50 for 2022. Using the treasury stock method, determine how many shares would be added in calculating 2022s diluted EPS for this potentially dilutive security.

3. Assume that all of the stock options were exercised, after the 3-year vesting period, in early 2026when the market price was $50 per share. Prepare the summary journal entry to reflect the exercise of these options.