Prepare journal entries relating to the stock-option plan

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Question - On November 1, 2014, Olympic Company adopted a stock-option plan that granted options to key executives to purchase 37,500 shares of the company's $12 par value common stock. The options were granted on January 2, 2015, and were exercisable 2 years after the date of grant if the grantee was still an employee of the company. The options expired 6 years from date of grant. The option price was set at $40, and the fair value option-pricing model determines the total compensation expense to be $780,000.

All of the options were exercised during the year 2017: 28,125 on January 3 when the market price was $68, and 9,375 on May 1 when the market price was $79 a share.

Prepare journal entries relating to the stock-option plan for the years 2015, 2016, and 2017. Assume that the employee performs services equally in 2015 and 2016.

Reference no: EM132059906

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