Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2013, options were granted for seventy-eight thousand $1 par common shares. The exercise price equals the $6 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2016, and expire December 31, 2017. 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 2013?

Compensation expense	26,000
Paid-in capital