Walters Audio Visual, Incorporated, offers a stock option plan to its regional managers. . On January 1, 2024, 48 million options were granted for 48 million $1 par common shares. The exercise price is the market price on the grant date, $10 per share. Options cannot be exercised prior to January 1, 2026, and expire December 31, 2030. The fair value of the options, estimated by an appropriate option pricing model, is $3 per option. Because the plan does not qualify as an incentive plan, Walters will receive a tax deduction upon exercise of the options equal to the excess of the market price at exercise over the exercise price. The income tax rate is 25% Required: 1. Determine the total compensation cost pertaining to the stock option plan. 2. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2024 3. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2025. 4. Record the exercise of the options and their tax effect if all of the options are exercised on March 20, 2029, when the market price is $14 per share. 5. Assume the option plan qualifies as an incentive plan. Prepare the appropriate journal entries to record compensation expense and its tax effect on December 31, 2024 6. Assuming the option plan qualifies as an incentive plan, record the exercise of the options and their tax effect if all of the options are exercised on March 20, 2029, when the market price is $13 per share. Req 1 Req 2 to 4 Req 5 and 6 2. & 3. Prepare the appropriate journal entries to record compensation expense and its tax ef 4. Record the exercise of the options and their tax effect if all of the options are exercised on $14 per share. Note: (If no entry is required for a transaction/event, select "No journal entry required" in the millions (i.e., 10,000,000 should be entered as 10).) View transaction list 1 Record compensation expense on December 31, 2024. 2 Record any tax effect related to compensation expense recorded in 2024. 3 Record compensation expense on December 31, 2025. 4 Record any tax effect related to compensation expense recorded in 2025. 5 Record the exercise of the options on March 20, 2029 when the market price is $14 per share. 6 Record any tax effect related to the exercise of the options. Debit Credit Req 1 Keq 2 to 4 Req 5 and 6 5. Assume the option plan qualifies as an incentive plan. Prepare the appropriate journal entries t tax effect on December 31, 2024. 6. Assuming the option plan qualifies as an incentive plan, record the exercise of the options and exercised on March 20, 2029, when the market price is $13 per share. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first millions (i.e., 10,000,000 should be entered as 10). View transaction list 1 Record compensation expense on December 31, 2024. 2 Record any tax effect related to compensation expense recorded in 2024. 3 Record the exercise of the options on March 20, 2029 when the market price is $13 per share. 4 Record any tax effect related to the exercise of the options. X Debit Credit