Question

Exercise 16-11 On January 1, 2018, Crane Inc. granted stock options to officers and key employees for the purchase of 21,000 shares of the company's $10 par common stock at $24 per share. The options were exercisable within a 5-year period beginning January 1, 2020, by grantees still in the employ of the company, and expiring December 31, 2024. The service period for this award is 2 years. Assume that the fair value option-pricing model determines total compensation expense to be $361,400. On April 1, 2019, 2,100 options were terminated when the employees resigned from the company. The market price of the common stock was $35 per share on this date. On March 31, 2020, 12,600 options were exercised when the market price of the common stock was $41 per share. Prepare journal entries to record issuance of the stock options, termination of the stock options, exercise of the stock options, and charges to compensation expense, for the years ended December 31, 2018, 2019, and 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter for the amounts.)

Answer 1

Date	Account title and explanation	Debit($)	Credit($)
Jan1 ,2018	No entry
Dec 31 ,2018	Compensation expense (361400/2)	$ 180,700
	Paid in capital- stock option		$ 180,700
April,1 2019	Paid in capital stock	$   18,070
	Compensation expense (180700*2100/21000)		$   18,070
Dec 31, 2019	Compensation expense	$ 162,630
	Paid in capital- stock option		$ 162,630
	(361400/2)*18900/21000
March 31,2020	cash (12600*24)	$ 302,400
	paid in capital- stock (=(361400*12600/21000))	$ 216,840
	common stock(12600*10)		$ 126,000
	Paid in capital in excess of par		$ 393,240