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On January 1, 2019, Golow Inc., granted 300,000 stock options to several of its officers for...

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)

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Expert Solution

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

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