Wall Drugs offered an incentive stock option plan to its employees. On January 1, 2018, options were granted for 60,000 $1 par common shares. The exercise price equals the $5 market price of the common stock on the grant date. The options cannot be exercised before January 1, 2021, and expire December 31, 2022.
- Each option has a fair value of $1 based on an option pricing model. What is the entry to record the expiration of 10% of the options on December 31, 2022?
A)

\begin{array}{|l|l|l|}\hline \text { Paid-in capital\_stock options } & 6,000 & \\\hline \text { Paid-in capital\_expired stock options } & & 6,000 \\\hline\end{array}

\begin{array}{|l|l|l|}\hline \text { Paid-in capital\_stock options } & 6,000 & \\\hline \text { Retained earnings } & & 6,000 \\\hline\end{array}

\begin{array}{|l|l|l|}\hline \text { Paid-in capital-stock options } & 6,000 & \\\hline \text { Compensation expense } & & 6,000 \\\hline\end{array}

\begin{array}{|l|r|r|}\hline \text { Stock options receivable } & 30,000 & \\\hline \text { Common stock } & & 6,000 \\\hline \text { Paid-in capital\_excess of par } & & 27,000 \\\hline\end{array}

If a Stock Dividend Were Distributed, When Calculating the Current

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge