In: Accounting
On January 1, 2019, Golow Inc., granted 300,000 stock options to several of its officers for the purchase of the Company’s $10 par value common stock at an option price of $30 PER SHARE. The options were exercisable beginning January 1, 2021 by grantees still working for the Company on that date. (There is a two year service period.) Any unexercised options will terminate on December 31, 2029. Assume that the fair value option pricing model determines total compensation expense to be $3,000,000. On March 31, 2021, 200,000 options were exercised. The remaining options terminated because they weren’t exercised. Required: Please prepare all the necessary entries to be recorded for 2019, 2020, 2021, and 2029. (SHOW ALL WORK)
Year | Account Titles | Debit $ | Credit $ | |
2019 | Stock Option Compensation Expense | 1,500,000 | ||
Additional paid in capital - Stock Options | 1,500,000 | |||
( 3,000,000 x 1/2 ) | ||||
2020 | Stock Option Compensation Expense | 1,500,000 | ||
Additional paid in capital - Stock Options | 1,500,000 | |||
(3,000,000 - 1,500,000 ) | ||||
2021 | Cash ( 200,000 x 30 ) | 6,000,000 | ||
Additional paid in capital - Stock Options | 2,000,000 | |||
(3,000,000 / 300,000 ) x 200,000 | ||||
Common Stock- $10 par value ( 200,000 x 10 ) | 2,000,000 | |||
Additional Paid in capital- Common Stock | 6,000,000 | |||
2029 | Additional Paid in capital- Stock options | 1,000,000 | ||
Paid in Capital- Expired Stock options | 1,000,000 | |||
( 3,000,000 / 300,000 ) x 100,000 | ||||