On January 1, 2012, Magilla Inc. granted stock options to officers and key emplo
ID: 2369937 • Letter: O
Question
On January 1, 2012, Magilla Inc. granted stock options to officers and key employees for the purchase of 20,000 shares of the company's $10 par common stock at $29 per share. The options were exercisable within a 5-year period beginning January 1, 2014, by grantees still in the employ of the company, and expiring December 31, 2016. The service period for this award is 2 years. Assume that the fair value option pricing model determines total compensation expense to be $350,000.
On April 1, 2013, 2,000 option shares were terminated when the employees resigned from the company. The market price of the common stock was $36 per share on this date.
On March 31, 2014, 12,000 option shares were exercised when the market price of the common stock was $40 per share.
Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2012, 2013,and 2014. (If no entry is required enter No Entry for the description and 0 for the amount. List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5, 2.)
Date Description/Account Debit Credit 1/1/12 CashPaid-in Capital in Excess of ParCommon StockNo EntryUnearned CompensationCompensation ExpensePaid-in Capital-Stock Options Compensation ExpenseNo EntryPaid-in Capital-Stock OptionsCashPaid-in Capital in Excess of ParCommon StockUnearned Compensation 12/31/12 CashPaid-in Capital-Stock OptionsCompensation ExpensePaid-in Capital in Excess of ParCommon StockUnearned Compensation Compensation ExpenseUnearned CompensationCommon StockPaid-in Capital-Stock OptionsCashPaid-in Capital in Excess of Par 4/1/13 Unearned CompensationPaid-in Capital-Stock OptionsCompensation ExpenseCashPaid-in Capital in Excess of ParCommon Stock Paid-in Capital in Excess of ParCommon StockUnearned CompensationCompensation ExpensePaid-in Capital-Stock OptionsCash 12/31/13 CashPaid-in Capital in Excess of ParCommon StockPaid-in Capital-Stock OptionsUnearned CompensationCompensation Expense Unearned CompensationPaid-in Capital-Stock OptionsCompensation ExpenseCashPaid-in Capital in Excess of ParCommon Stock 3/31/14 Unearned CompensationCashPaid-in Capital in Excess of ParCompensation ExpenseCommon StockPaid-in Capital-Stock Options Common StockUnearned CompensationCompensation ExpensePaid-in Capital-Stock OptionsCashPaid-in Capital in Excess of Par Unearned CompensationPaid-in Capital-Stock OptionsPaid-in Capital in Excess of ParCompensation ExpenseCashCommon Stock Common StockCompensation ExpensePaid-in Capital-Stock OptionsCashPaid-in Capital in Excess of ParUnearned CompensationExplanation / Answer
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