QUESTION 17

1. Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2020, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2023 and expire December 31, 2024. Each option has a fair value of $1 based on an option pricing model

   Which is the correct entry to record compensation expense for the year 2020?

   A) Dr. Compensation expense 12,000 Cr. Paid-in capitalstock options 12,000

   B) Dr. Compensation expense 20,000 Cr. Common stock 20,000

   C) Dr. Compensation expense 20,000 Cr. Paid-in capitalstock options 20,000

   D) Dr. Compensation expense 80,000 Cr. Paid-in capitalstock options 80,000

   		a.Option A.
   		b.Option B.
   		c.Option C.
   		d.Option D.