Reference no: EM132937091

Problem 1: Prepare the necessary entries from January 1, 2020, to February 1, 2022, for the following events. If no entry is needed, write "No recording necessary." Dec 31 is the year end.

1. On January 1, 2020, the shareholders of Phillies Inc. adopted a stock option plan for its top executives, where each could receive rights to purchase up to 5,000 common shares at $ 40 per share. At this date, the shares were trading for $ 32 per share.
2. On February 1, 2020, options were granted to six executives to purchase 3,000 shares each. The options were non-transferable and the executive had to remain an employee of the company to exercise the option. The options expire on February 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021. The actuaries Phillies retained have determined the total compensation expense to be $ 250,000.
3. On February 1, 2022, four executives exercised their options. The fifth and the sixth executive chose not to exercise their options, which therefore were forfeited.