Under its executive stock option plan, National Corporation granted options on J

Question

Under its executive stock option plan, National Corporation granted options on January 1, 2016, that permit executives to purchase 22 million of the company's $1 par common shares within the next seven years, but not before December 31, 2018 (the vesting date). The exercise price is the market price of the shares on the date of grant, $26 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. Suppose that the options are exercised on April 3, 2019, when the market price is $30 per share. Ignoring taxes, what journal entry will National record? (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) View transaction list Journal entry worksheet Record entry for options exercised on April 3, 2019, when the market price is $30 per share. Note: Enter debits before credits. Date General Journal Debit Credit April 03, 2019 Record entry Clear entry View general journal

Explanation / Answer

solution:

Date account title debit credit Apr-03 cash (22*26) 572 paid in capital - stock option (22*4) 88 common stock (22*1) 22 paid in capital - excess of par 638

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