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(Solved): Example 15.4 Stock option compensation plan Similar to homework E15,11 P15.3 Berg Company adopted a ...




Example \( 15.4 \) Stock option compensation plan
Similar to homework E15,11
P15.3 Berg Company adopted a stock-option plan o
Example Stock option compensation plan Similar to homework E15,11 P15.3 Berg Company adopted a stock-option plan on November 30,2021 , that provided that 70,000 shares of par value stock be designated as available for the granting of options to officers of the corporation at a price of a share. The market price was a share on November . On January 2, 2022, options to purchase 28,000 shares were granted to president Tom Winter and options to purchase 14,000 shares were granted to vice president Michelle Bennett for services to be rendered in 2022 and 2023 . The market price of the stock was a share on January 2,2022 . The options were exercisable for a period of one year following vesting. The fair value of the options on the grant date was per option. On December 31,2023 , vice president Bennett exercised her options for 14,000 shares when the market price was a share. The market price of the stock dipped during 2024 and was a share on December 31 , 2024. The president did not exercise his options because the market price of the stock was below the exercise price. Instructions: Prepare the necessary journal entries in 2021 when the stock-option plan was adopted, (b) in 2022 when options were granted, (c) in 2023 when options were exercised, and (d) in 2024 when options lapsed.


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DateGeneral JournalDebitCreditJan 2 2019-No entry required-Compensation Expense ($4.00 per share × 22,000 share)88000Paid-in Capital—Stock Options
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