The following events occurred regarding the company's executive compensation plan

2. On 1/1/x4, the stockholders adopted a stock option plan for too executives whereby each might receive rights

to purchase up to 20,000

shares of common stock at $40 per share, the par value is $10 per share.

3. on 2/1/x4 options were granted to each of five executives to purchase 20,000 shares. The options were non-transferable and the

exacutive had to remain an employce of the company to exercise the option. The options expire on 2/1/x6, It is assumed that the options were for services performed equally in 20x4 and 20x5. The Black-Scholes option pricing, model determines total compensation expense to be 2,100,000

3. At 2/1/x6, four executives exercised their options. The fifth executive chose not to exercise his options, which therefore were forfeited.

Prepare the journal entry for 12/31/x4. show work

compensation expense

Paid-In capital- stock options

17 24214 in