Question
Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2015, options were granted for sixty thousand $0.2 par common shares.
Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2015, options were granted for sixty thousand $0.2 par common shares. The exercise price, $5, equals the market price of the common stock on the grant date. The options cannot be exercised before January 1, 2018, and expire December 31, 2021. Each option has a fair value of $1 based on an option pricing model.
Using information in question 3, which is the correct entry to record the exercise of 90% of the options on April 15, 2018 when the market price of the stock was $8? Select one:
a. Cash 270,000 Paid in capital for stock options 60,000 Common stock 12,000 Paid in capital in excess of par 318,000
b. Cash 270,000 Common stock 10,800 Paid in capital in excess of par 259,200
c. Cash 270,000 Paid in capital for stock options 54,000 Common stock 10,800 Paid in capital in excess of par 313,200
d. Cash 486,000 Common stock 10,800 Paid in capital in excess of par 475,200
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