Prepare the journal entries for the first year

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Assume that Jet Blue has a stock-option plan for top management. Each stock option represents the right to purchase a share of Jet Blue $1 par value common stock in the future at a price equal to the fair value of the stock at the date of the grant. Jet Blue has 75,000 stock options outstanding, which were granted at the beginning of 2014. The following data relate to EAH option grant.

Exercise price for options $31

Market price at grant date (January 1, 2014) $31

Fair value of options at grant date (January 1, 2014) $2

Service period 4 years

(a) Prepare the journal entry(ies) for the first year of the stock-option plan.

(b) Prepare the journal entry(ies) for the first year of the plan assuming that, rather than options, 2,500 shares of restricted stock were granted at the beginning of 2014.

Reference no: EM131789985

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