Walter Corporation granted 60 million incentive stock options to division managers on January 1, 2021. Each option permits holders to purchase one share of the companys $1 par common shares within the next six years, but not before December 31, 2023 (the vesting date). The exercise price is the market price of the shares on the date of grant, currently $38 per share. The fair value of the options, estimated by an appropriate option pricing model, is $6 per option. Managements policy is to estimate forfeitures. No forfeitures are anticipated. Ignore taxes. Required: 1. Determine the total compensation cost pertaining to the options on January 1, 2021. 2. Prepare the appropriate journal entry to record compensation expense on December 31, 2021. 3. Unexpected turnover during 2022 caused an estimate of the forfeiture of 5% of the stock options. Prepare the appropriate journal entry(s) on December 31, 2022 and 2023 in response to the new estimate. 4. Prepare the appropriate journal entry to record the exercise of 80% of the options on March 20, 2024, when the market price is $11 per share 5. Prepare the appropriate journal entry on December 31, 2027, when the remaining options that have vested expire without being exercised.

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