Question

On January 1, 2013, Sikes Company granted stock options to 100 key employees. Each employee received 300 options. Each option entitles the employee to purchase one share of $1 par value common stock at a price of $25. The options vest 3 years from the date of the grant. Sikes employed an option pricing model to determine a fair value of $5 per option as of the grant date.
1. What journal entry would Sikes make during 2013?
2. What journal entry would Sikes make during 2014?
3. What journal entry would Sikes make during 2015?
4. What journal entry would Sikes record to recognize the exercise of 70% of the options in January 2016, when the market price per share was $40?
5. Assume that the remaining 30% of the options expired unexercised. What journal entry would Sikes make to record the expiration?



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  • CreatedFebruary 20, 2015
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