need answer to 1 and 2 On January 1. 2014 options were granted to five executive

Question

need answer to 1 and 2 On January 1. 2014 options were granted to five executives whereby each might purchase 18,000 shares of the company's S10 par value common stock at $40 per share. A fair value option-pricing model determine total compensation expense to be SI.900.000. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options were exercisable within a 5-year period beginning January I. 2016. The service period for this award is 2 years It is assumed that the options were for service performed equally in 2014 and 2015. On February 1.2016 four executives exercised their options. Ellison then entered into the following transactions Bought 8,000 shares of its common stock at S29 a share. Sold 4,000 treasury shares at $30 a share. Sold 2,000 shares of treasury stock at S26 a share. Prepare journal entries for the transaction above. Indicate the effect each of the three transactions has on the financial statement

Explanation / Answer

Question II-1 Journal Entries Date Account Title Debit Credit Treasury Stock 232000 Cash 232000 Cash 120000 Treasury Stork 116000 Paid in capital from treasury Stock 4000 (Sold 4000 treasury stock @$30) Cash 52000 Paid in capital from treasury Stock 6000 Treasury Stork 58000 (Sold 2000 treasury stock @$26) Question 2 Stockholders Paid in Retained Transaction Assets Liabilities Equity Capital Earnings Bought 800 shares NE NE NE NE NE Sold 4000 stock I NE NE I NE Sold 2000 stock D NE NE D NE

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